Q.1 Briefly explain the six risk management processes. Ans.

Banks currently gather risk information from their numerous front office trading systems at the end of day and then stage it through a large number of intermediate steps and processes that aggregate and summarize the data before it is surfaced in the risk reports the following day. This is a time-consuming process that causes considerable delay in the finalization and circulation of the reports. How can technology help overcome these challenges? We offer six recommendations based on our work with investment banking customers around the world: Create a holistic view of risk - In most investment banks today, market and credit risk are treated as separate operational functions, with little, if any, interaction. In many operations, much of the risk and pricing information still resides within the numerous trading systems used by the front office. Increase processing speeds - Once trading has been completed on a trading desk and the trading book reconciled and closed it needs to be processed and passed to the risk management system for Analysis and Reporting. Traditionally this is done in batch mode via End of the Day processing ready for reporting the following day. Errors, omissions and corrections are dealt with the following day, a process which can take an inordinate amount of time. This long-winded process and the subsequent delay in the availability of the comprehensive risk reports is no longer acceptable to either senior management or the business. Improve data transparency - Current risk systems, for performance reasons, typically aggregate the risk data at the book or portfolio level and retain little, if any detail, down at the trade or leaf level. While this enables the risk department to produce their reports quickly, this approach is fraught with challenges. At the very least it obscures the underlying information and makes it very hard for the front office and the risk managers to reconcile any discrepancies in the underlying data without considerable time, effort and angst, further exacerbating the information confidence gap. Enrich data quality - No data set, by its very nature, can be perfect. However, with the right level of care and attention it can be of high quality and integrity. But quality takes time, especially where old style legacy batch processing systems are used. Expand risk measures - Value at risk is no longer an adequate measure of risk. Nor is it capable of informing senior managers of the true nature of their market and credit risk exposures on their trading books. In order to provide full transparency and the level of detail required by the business, many different types of analyses are now required including: eVar, sVar, transient concentrations, extreme value, abnormal correlations, stress tests and a wide range of other tests and scenarios.

Improve self-service reporting - In order for the risk managers to be more effective at their job of analysing and reporting on market and credit risk, they need a system that allows them to quickly and easily report on the risk data at the level and in the way that best fits the rapidly evolving needs of the business. Risk managers need to be able to slice and dice the risk data in numerous new and interesting ways to be able to highlight areas of interest and/or concern in the risk figures. Risk managers can create and manipulate reports on a self-service basis in a matter of minutes and publish the results to their colleagues, the front office and senior management via a number of channels including on-screen and hard copy reports and the latest multi-media devices such as the IPad. Q.2 Write the significant changes in the global scenario of insurance. Ans. The global insurance industry is one of the largest sectors of finance. It ranges from consumer to corporate and industrial insurance, and even reinsurance, or insurance of insurance. The major insurance markets of the world are obviously the US, Europe, Japan, and South Korea. Emerging markets are found throughout Asia, specifically in India and China, and are also in Latin America. With the internet and other forms of high-speed communication, companies and individuals are now able to purchase insurance and related financial products from almost anywhere in the world. Increasing affluence, especially in developing countries, and a rising understanding of the need to protect wealth and human capital has led to significant growth in the insurance industry. Given the evolving and growing socio-economic conditions worldwide, insurance companies are increasingly reaching out across borders and are offering more competitive and customized products than ever before. Global insurance platform has witnessed a phenomenal change over the past decade. The forces of globalization and liberalization have brought the insurance companies across the world closer to each other than ever before. The insurance landscape has changed significantly over the years due to many unforeseen incidents around the world like 9/11, SARS, derailment of corporate governance, natural disasters like Tsunami, Hurricane Katrina etc. Outsourcing is another major development in the insurance sector. Waning margins, massive claims disbursement and increasing competition in recent years, especially post 9/11, have compelled insurance companies to opt for outsourcing, to improve efficiency and channelize resources towards the core functions like product development and innovation. Over the past ten years, global insurance premiums have risen by more than 50%, with annual growth rates ranging between 2 and 10%. In 2004, global insurance premiums amounted to $3.3 trillion. The global insurance market grew by 7.6% in 2007 to reach a value of $3,688.9 billion. In 2012, the global insurance market is forecast to have a value of $4,608.5 billion, an increase of 24.9% since 2007. Life insurance dominates the global insurance market, accounting for

59.7% of the markets value. Europe accounts for 39.3% of the global insurance markets value. AXA generates 4.4% of the global insurance markets value. Top ten global insurance companies are american intl group(USA), AXA group (france), allianz worldwide(germany), Manulife financial (Japan),General group (italy), prudential financial (united states), met life (united states), Aviva(united kingdom) and Aegon(Netherland). BOOMING INSURANCE INDUSTRY IN INDIA: With a huge population base and large untapped market, insurance industry is a big opportunity area in India for national as well as foreign investors. India is the fifth largest life insurance market in the emerging insurance economies globally and is growing at 32-34% annually. This impressive growth in the market has been driven by liberalization, with new players significantly enhancing product awareness and promoting consumer education and information. The strong growth potential of the country has also made international players to look at the Indian insurance market. Moreover, saturation of insurance markets in many developed economies has made the Indian market more attractive for international insurance player. Q3. Describe the recommendations of the Malhotra committee. Ans. Life Insurance was the first to be nationalized in 1956. Life Insurance Corporation of India was formed by consolidating the operations of various insurance companies. General Insurance followed suit and was nationalized in 1973. General Insurance Corporation of India was set up as the controlling body with New India, United India, National and Oriental as its subsidiaries. The process of opening up the insurance sector was initiated against the background of Economic Reform process which commenced from 1991.For this purpose Malhotra Committee was formed during this year who submitted their report in 1994 and Insurance Regulatory Development Act (IRDA) was passed in 1999. Resultantly Indian Insurance was opened for private companies and Private Insurance Company effectively started operations from 2001. The insurance sector in India dates back to 1818, when Oriental Life Insurance Company was incorporated at Calcutta. Thereafter, few other companies like Bombay Life Assurance Company, in 1823 and Triton Insurance Company, for General Insurance, in 1850 were incorporated. Insurance Act was pass din 1928 but it was subsequently reviewed and comprehensive legislation was enacted in 1938. The nationalization of life insurance business took place in 1956 when 245 Indian and foreign Insurance provident societies were first merged and then nationalized. It paved the way towards the establishment of Life Insurance Corporation (LIC) and since then it has enjoyed a monopoly over the life insurance business in India. General Insurance followed suit and in 1968, the insurance act was amended to allow for social control over the general insurance business. Subsequently in 1973, non-life insurance business was nationalized and the General Insurance Business (Nationalization)Act, 1972 was promulgated. The General Insurance Corporation (GIC) in its present form was incorporated in1972 and maintains a very strong hold over the non-life insurance business in India. Due to concerns of (a)Relatively low spread of insurance in the country.(b) The efficient and quality functioning of the Public Sector insurance companies(c) The untapped potential for mobilizing long-term

contractual savings funds for infrastructure the (Congress) government set upan Insurance Reforms committee in April 1993. Insurance is an Rs.400 billion business in India, and together with banking services adds about 7% to Indias GDP. Gross premium collection is about 2% of GDP and has been growing by 1520%per annum. India also has the highest number of life insurance policies in force in the world, and total investible funds with the LIC are almost 8% of GDP. Yet more than three-fourths of Indias insurable population has no life insurance or pension cover. Health insurance of any kind is negligible and other forms of non-life insurance are much below international standards. To tap the vast insurance potential and to mobilize long-term savings we need reforms which include revitalizing and restructuring of the public sector companies, and opening up the sector to private players. A statutory body needs to be made to regulate the market and promote a healthy market structure. Insurance Regulatory Authority (IRA) is one such body, which checks on these tendencies. Q4. Explain the IRDA Preparation of Financial Accounts and Investment guidelines. Ans. The Authority in order to streamline the preparation of the financial statements of General Insurance Business, had issued various Circular/Guidelines. In order to enable the Insurers to have a one stop document of all such directions issued in connection with preparation of Financial Statements, a Master Circular has been prepared. This Master Circular consolidates all Circulars issued by the Authority up to 30th Sep., 2012 and will have the effect of superseding such earlier Circular(s) issued. The Master Circular covers all Performance Ratios, mandated through Public Disclosures vide IRDA Circular Reference IRDA/F&I/CIR/F&A/012/01/2010, dated 28th January, 2010 and the Master Circular shall be effective from 5th Oct., 2012. The Authority in order to streamline the preparation of the financial statements of General Insurance Business, have been issuing various Circular/Guidelines. In order to enable the Insurers to have a one stop document of all such directions issued, this Master Circular has been prepared. This Master Circular essentially consolidates all directions/Circulars issued by the Authority upto 30th September, 2012 as indicated in the Appendix and will have the effect of superseding such earlier circular(s) of the Authority In order to prepare this Master Circular a Working Group was formed with members drawn from both PSUs and Private Sector Insurers and the draft of such compilation was exposed to through the General Insurance Council to the Industry and after incorporating the suggestions received, the same was forwarded to the Sub-Group that was formed under IRDAs Standing Committee on Accounting Issues for its recommendation.

Every General insurance/Reinsurer shall comply with the requirements of Schedule B of IRDA (Preparation of Financial Statements and Auditors Report of Insurance Companies) Regulations, 2002 (the Regulations). Section 11(1A) of the Insurance Act, 1938 requires all insurers to prepare at the expiration of each financial year, with reference to that year, a balance sheet, a profit and loss account, a separate account of receipts and payments, a revenue account in accordance with the regulations made by the Authority. Every Balance sheet, Receipt and Payments Account [Cash Flow Statement] and Profit and Loss Account [Shareholders' Account] of the insurer shall be in conformity with the Accounting Standards (AS) referred to in section 211 (3C) of the Companies Act, 1956, to the extent applicable to the insurers carrying on general insurance business. Attention is drawn to section 15 of the Insurance Act, 1938 which provides furnishing of the audited accounts and statements referred to in section 11 or sub-section (5) of the section 13 with the Authority within six months from end of the financial year. As insurers are finalizing their annual accounts much earlier than the prescribed timelines, it is hereby directed that insurers shall file an advance copy of attested true copy of the annual financial statements within 15 days from the date of adoption of accounts by the Board In the event, the accounts adopted by the Board are modified in the general meeting of the shareholders, the revised accounts duly signed as per the provisions of the Insurance Act, 1938 shall be filed with the Authority forthwith. Q5. Write down the purpose, functions and advantages of life insurance. Ans. As the name suggests, group insurance is a product designed to provide life insurance to a group of people under a single master policy. A group insurance policy can be taken by any group of people, big or small, that comes together for any reason, apart from that of specifically benefitting from an insurance scheme. A group policy extends to anyone irrespective of their age, gender, profession, social background and such factors. Group insurance is not limited to only employer-employee groups, but is extended to other homogenous groups too. For instance, in 2008, a school in Gujarat bought a life insurance policy for its students. (See picture alongside.) Functions of group life policies - Group life policies are similar to individual life policies and can be classified on the basic functions that they serve. These are explained below: Gratuity - On completion of five years in an organisation, employees are entitled to gratuity. A group gratuity insurance policy provides a company with an investment option to build a pool of funds that can be used to pay off the gratuity amounts.

Superannuation: A group superannuation scheme serves as a retirement plan wherein the amount that is accumulated over the employment term is released upon retirement. Term - On death of any of the members of the group, this kind of group plan pays the sum assured (SA) to the family of that particular member. Savings - A group savings insurance policy can be used as a savings tool for the members to accumulate wealth along with life insurance. Credit protection - This type of insurance policy is usually offered by banks or lenders. The plan covers any outstanding loan amount that may be due after the death or disability of the loaned. How much do group insurance plans cost? The insurers that provide insurance to these groups evaluate the risk based on the group as a whole and decide on the premium to be paid, according to the risk classification of the group. The premium contribution can be usually done in two ways. Either the entire premium amount is paid by the company/ group owner that has purchased the policy for its employees or members, or, like in a majority of cases, the premium is partially paid for by the insurer, while the rest of the amount is paid by the members of the group. This is a good option for someone who may have to pay a larger premium for life cover due to his risk profile. Since a group plan covers all kinds of risk profiles under the same policy, they usually charge a lower premium than an individual plan. Q6. List and explain the various rural insurance policies. Ans. Based on the survey data of 111 rural insurance salesmen in Tai Ping Life Insurance Co., ltd, Sichuan branch, this paper has empirically studied on influencing factors of rural insurance salesmans sale performance by applying multiple ordered and classification logistic model. The result shows that the gender of insurance salesman, working time, levels of position, training goal, training ways, the single premium below 2 000 Yuan, the reward sale and marketing ways of insurance are significant factors. This paper also analyzes the causes of those factors briefly and puts forward relevant suggestions. Keywords: Rural insurance salesman, Sale performance, Logistic model, Factor analysis In recent years, China insurance industry has made great development on the whole. However, there has arised disequilibrium development between the city and the countryside, and it mainly shows that urban insurance industry has developed more mature than rural insurance industry (Zhao, 2006). Therefore, it is important to give some consideration to the rural insurance market

while strategies of the insurance industry are implemented in order to promote rural economy development (Lin, 2003). The related departments of government had yet paid more attention to change the current situation which had put forward some relevant policies and files such as the representatives of the 3th Session of the 10th National People's Congress recommended that laying down agricultural insurance law regulated the agricultural insurance policy implementation in 2006, several opinions of the State Council on the insurance industry of reform and development clearly stressed that it must develop commercial endowment insurance, health insurance and accident injury insurance for farmers, and China. Insurance Regulatory Commission also formulated the qualification granting system of rural insurance salesman at the same year. The China Insurance Regulatory Commission and the Ministry of Agriculture worked on the policy-oriented agricultural insurance scheme together and implemented the premium subsidies policy of farmers taking part in agricultural insurance in 2007. And the National People's Congress and Chinese People's Political Consultative Conference made full expounds about the role that insurance mechanism should play in the respects of improving the rural people's livelihood, the rural financial service quality and rural social security which also put forward definite requirements of rural insurance work in 2010. The insurance industry of Sichuan develops very rapidly today. By the end of 2008, there were 83 000 insurance practitioners, the total premium income reached 49427000000 Yuan RMB, among of which, the policy-oriented agricultural insurance reached 999 000 000Yuan RMB, the risk guarantee insurance reached 18111000000 Yuan RMB and the rural small personal insurance reached 3356 000 Yuan RMB which provided risk safeguard for 97000 farmers. It showed that Sichuan insurance companies had play a important role in social security which made up for economic loss of the policy-holder and bear a part of burden for government. However, We chuan earthquake in 2008 also reflected that the residents insurance consciousness was very weak and the insurance participating rate was extreme low which were not only related with that the rural economic development level was low and uneven, the insurance market was irregularities, the effective supply of insurance products was short and insurance institutions and distribution network in rural were few but also rural insurance salesmans sale behavior was imperfect (Fan, 2010). Now it is to study the influencing factors of rural insurance salesmans sale performance and make some revisions, and it will have important practical significance to promote the rural insurance industry development of Sichuan and the new rural construction in western of China.