(a) Who is an actuary?
(b) Differentiate between contribution and group insurance
(c) Describe three types of risks that may be insured against under marine insurance
Explanation
(a) An Actuary is a person involved in life assurance, assessing risks and calculating premiums based on the statistical information of pension funds.
(b)
| Contribution | Group insurance |
| This is one of the principles of insurance | This is a type of insurance |
| A risk is insured with many insurance companies | A group of employees takes out one single policy |
| Each insurance company involves is liable for only a proportion of the loss | The insurance company is liable for everyone covered by the single policy |
(c) The Types of risks that may be insured against are:
(i) Actual Total Loss: This occurs when the insured ship or goods are wholly destroyed, damaged or lost.
(ii) Constructive Total Loss: This expression means that the subject matter is so damaged as to be beyond economic repairs. The cost of repair would be more than what it would be worth.
(iii) General Average Loss: This is a partial loss. This refers to an extraordinary loss or damage reasonably and voluntarily incurred by the ship’s master in the common interest. For instance, a ship’s master may be compelled by circumstances beyond his control to jettison some of the cargo.
(iv) Particular Average Loss: This means partial loss or damage to the ship accidentally, for instance, damage by sea-water, collision, etc. It is borne by the owners of the property, not the ship owners.