Question No 5: XYZ firm was started by 3 partners Omar, Abdullah and Zakir in the year 1999. It was registered as a partnership firm. All three partners took one insurance policy to cover the losses due to death of any one of the partners in the same year. The firm was involved in extraction and processing of minerals. Initially the company had around 15 employees. Later the number of employees increased to 150 in the year 2010. So, the partners decided to take an insurance on the employees (Sum Assured of RO10000 each) to compensate the losses due to death of the employees. The premium for the insurance was paid by the firm. In 2012 one of the employees died due to an accident in the workplace. The company filed a claim to the insurance. The insurance company on investigation found that the employee was not provided with proper safety gears which could have saved his life. The company did not disclose this risk at the time of proposal in order to reduce the premium. The insurance company however accepted the claim partially. Later the company revised the insurance contract disclosing the risks in the job and paid additional premium for the same. In 2013 one of the partners died due to health reason and the insurance company accepted the claim. Later a new partnership was created. a. Discuss the type of insurance products taken by the partners for themselves and for their employees with its features in your own words. (200 words)(4 Marks) b. Do you agree with the partial payment of claims by the insurance company? support your answer with suitable past case studies with references (2 Marks) c. Discuss how the company could have handled the above risk without proper insurance. (300 words) (4 Marks) Question No 5: XYZ firm was started by 3 partners Omar, Abdullah and Zakir in the year 1999. It was registered as a partnership firm. All three partners took one insurance policy to cover the losses due to death of any one of the partners in the same year. The firm was involved in extraction and processing of minerals. Initially the company had around 15 employees. Later the number of employees increased to 150 in the year 2010. So, the partners decided to take an insurance on the employees (Sum Assured of RO10000 each) to compensate the losses due to death of the employees. The premium for the insurance was paid by the firm. In 2012 one of the employees died due to an accident in the workplace. The company filed a claim to the insurance. The insurance company on investigation found that the employee was not provided with proper safety gears which could have saved his life. The company did not disclose this risk at the time of proposal in order to reduce the premium. The insurance company however accepted the claim partially. Later the company revised the insurance contract disclosing the risks in the job and paid additional premium for the same. In 2013 one of the partners died due to health reason and the insurance company accepted the claim. Later a new partnership was created. a. Discuss the type of insurance products taken by the partners for themselves and for their employees with its features in your own words. (200 words)(4 Marks) b. Do you agree with the partial payment of claims by the insurance company? support your answer with suitable past case studies with references (2 Marks) c. Discuss how the company could have handled the above risk without proper insurance. (300 words) (4 Marks)
