Tribhuvan University
Faculty of Management
Office of the Dean
Bachelor of Business Administration in Finance (BBA-F)
Course Description
:This c ourse deals with fundamentals of insurance. Accordingly, it begins with functions of insurance in the context of risk management. Then it deals with the fundamental principles of insurance along with essentials of insurance contract. The course also deals with insurance operations in the background of insurance regulations. Further, it covers insurance intermediaries and surveyors, and financial statements of the insurers. Finally, it provides an overview of insurance industry in Nepal and opportunities and challenges faced by the industry. Course Learning Outcomes On completion of this course the students will be able to: Understand about risk and risk management process; Acquire knowledge about the characteristics and functions of insurance and its types; Understand the principles of insurance; Be familiar with the objectives of insurance regulation; Explain the operation of insurance companies; Acquire knowledge on claim settlement and investment of insurance fund; Explain about the functions and licensing of intermediaries and surveyors; Prepare and analyze financial statements of insurance companies; Understand the trend of insurance market and comment on contemporary issues.
Course Objective
:This course aims to provide students with basic understanding of fundamental concepts of risk and principles of insurance. This course will also enable students to understand about the insurance regulation, inter mediary functions, general functions of insurers viz. rate making, marketing, underwriting and claim procedure, reinsurance, and investments. Students will understand about product, trend, nature of Nepalese insurance industry. Course Description This c ourse deals with fundamentals of insurance. Accordingly, it begins with functions of insurance in the context of risk management. Then it deals with the fundamental principles of insurance along with essentials of insurance contract. The course also deals with insurance operations in the background of insurance regulations. Further, it covers insurance intermediaries and surveyors, and financial statements of the insurers. Finally, it provides an overview of insurance industry in Nepal and opportunities and challenges faced by the industry. Course Learning Outcomes On completion of this course the students will be able to: Understand about risk and risk management process; Acquire knowledge about the characteristics and functions of insurance and its types; Understand the principles of insurance; Be familiar with the objectives of insurance regulation; Explain the operation of insurance companies; Acquire knowledge on claim settlement and investment of insurance fund; Explain about the functions and licensing of intermediaries and surveyors; Prepare and analyze financial statements of insurance companies; Understand the trend of insurance market and comment on contemporary issues.
Course Contents:
Lecture hours show the approximate classroom time allocated to each unit.
Unit 1. Risk Management
- Introduction to risk
- Types of risk: individual and enterprises, pure and speculative, fundamental and personal
- Introduction and objectives of risk management
- Risk management matrix
- Risk management process
- Cost of risk management.
Unit 2. Introduction to Insurance
- Meaning and definition of insurance
- Characteristics and functions of insurance
- Difference between risk and hazards, insurance and gambling, insurance and hedging
- Types of Insurance: life, general, reinsurance, social insurance, and micro insurance.
Unit 3. Principles of Insurance and Insurance Contracts
- Principles of Insurance: indemnity, insurable interest, utmost good faith, subrogation, proximate cause, mitigation, contribution
- Importance of insurance principles in insurance business
- Elemen ts of insurance contract
- Distinguishing characteristics of insurance contract.
Unit 4. Insurance Regulation
- Objectives of insurance regulation
- Importance of insurance regulation
- Role of International Association of Insurance Regulators (IAIS) in insurance regulation
- Role of Beema Samiti (Insurance Board of Nepal) in insurance regulation in Nepal
- Purpose of Insurance Act, Regulations and Directives.
Unit 5. Insurance Company Operations
- Insurance company operations: rate making of life and non -life insurance, underwriting, production, claims settlement, reinsurance, investment.
Unit 6. Insurance Intermediaries and Surveyors
- Functions of insurance agents, brokers, and third party administrators, and their licensing in Nepal
- Functions of surveyors, their categories and licensing in Nepal.
Unit 7. Financial Statements of Insurers
- Understanding of the financial statements of insurers: statement of financial positions, statement of profit or loss, statement of other comprehensive income, statement of cash flow, statement of changes in equity, annexes of life and non -life insurance companies’ financial statements
- Guidelines of Beema Samiti for the preparation of financial statements of insurance companies
- Analysis of financial statements.
Unit 8. Insurance Industry in Nepal
- Development and current status of insurance industry in Nepal
- Recent trends in insurance market, and opportunities and challenges
- Current statu s of micro insurance, social insurance, health insurance, agriculture insurance
- Emerging issues.
- Basic Books Rejda, G. E. Principles of Risk Management and Insurance. New Delhi: Pearson Education.
- Vaughan, E. J. & Vaughan, T. M. Fundamentals of Risk and Insurance. New York: John Wiley &
- Sons.
Suggested Readings:
Mishra, M. N. & Mishra, S. B. Insurance Principles and Practices. Delhi: S. Chand & Company Ltd. Gupta, P. K. Insurance and Risk Management. Mumbai: Himalaya Publishing House Ghimire, R. Insurance Theory and Practices. Kathmandu: Buddha Publication Government of Nepal, Insurance Act, 1992 and Insurance Regulation, 1993. Directives, guidelines, policies issued by Beema Samiti (Insurance Board of Nepal). Publications of Beema Samiti.