Section 5: Assignment Assignment Evidence The following assignment needs to be completed (or supported by naturally occurring evidence) for each unit standard in order for you to be RPLed for the full qualification. Please remember to clearly indicate and cross reference your assignment in the evidence summary sheets of your portfolio of evidence. Note: The assignments follow the qualification order of unit standards. ASSIGNMENT 1 FOR: Unit Standard Numbers – 9014; 8978; 10388; 10386; 10385; 10389 + 13940 1.1 Financial aspects of a range of issues a) You are required to investigate the financial aspects of personal-, business- and national issues. Source three current articles dealing with a specific financial event (e.g. the latest budget) from any of the following sources: Government sources (legislation / policy documents) Financial publications (journals, newspapers and magazines) The internet Using various mathematical formulae, analyse the impact of the described financial event from both a microeconomic (a business) and macroeconomic (national economy) perspective. Be sure that you explain the following economic terms in relation to your analysis: Gross Domestic Product Balance of payments Money supply Taxation Please note that copies of the articles used as references should be submitted as part of the assignment. b) Using the abovementioned articles (section a) discuss: - The need for compound investment growth in relation to inflationary aspects of the economy, and - Explain, using numerical examples, the effect of this requirement on your personal wealth. - Explain the principles of personal taxation – when are you liable and what needs to be complied with. - Mention the following indicators in your discussion: Indices, e.g. consumer price index Rate of inflation Interest rate e.g. bank rate Exchange rates 1.2 You are required to analyse the financial viability of the enterprise; A Company (see APPENDIX A for attached financial statements for the years 2002 and 2003). Be sure to refer to, and explain the relevance of, the following items found on either the balance sheet or income statement in your analysis: Cash and cash equivalents Expenses Accounts receivable Interest paid Loans receivable Fixed assets Bank overdraft Accounts payable Provisions Shareholders’ loans Revenue Gross profit a) Explain the importance of cash flow in terms of liquidity b) Distinguish between the purpose and elements of Balance sheets & income statements 1.3 Basic ethics in the work environment Spend 15 minutes reflecting on how your own values and beliefs influence your behaviour as a person when you interact with other people. Now list four examples of conflict between your personal values and ethics at the workplace. Briefly discuss how you manage this type of moral conflict from both a personal and professional context. 1.4 Budget and income planning You are required to show how you plan for your activities as an intermediary to meet your targets. You may use fictitious amounts to indicate the following: 1.4.1 Your income and expenditure needs presented in a simple budget to indicate debit (income) and credit (expense) amounts. 1.4.2 Indicate the amount of commission that is needed to meet the required income in terms of the number of prospects. 1.4.3 Explain the cumulative effect of renewal income with reference to guaranteed future income. 1.4.4 Submit a copy of your diary or work programme to indicate how you went about meeting your targets. Include the following lists: Phone calls Presentations Personal contacts 1.4.5 Explain the role of financial statements and how budgets influence financial reporting. Include sample financial statements and reflect your understanding of the important items by interpreting what the statements are stating (viability of business etc.) 1.5 Marketing process Compile a document describing the role of prospecting in achieving marketing success according to the guidelines provided. Include the following in your document: 1.5.1 Explain the marketing process in short term insurance. 1.5.2 Describe your modus operandi in marketing a short term insurance product making use of the following methods: Cold canvassing Centres of influence Referrals Prospecting letters Provide an example of each method. 1.5.3 Describe the role of prospecting in achieving marketing success. 1.5.4 Identify three different sources of prospective clients and the positive and negative outcomes of these sources. Provide authentic examples. Present your answer in table format. Source Positive outcome & Negative outcome & authentic example authentic example 1.6 Describe how you will access a potential short term insurance client and why the following is important: Face-to-face communication The role of time management in an initial communication situation when you meet with a client. 1.7 List five questions you will ask a client to elicit the required information. 1.8 Describe how you will make an accurate assessment of a prospective client’s buying motives in three different situations. 1.9 Describe how you will prioritise clients’ needs in order to propose a solution. 1.10 Explain why it is necessary to match a product to the needs, value system and wants of a prospective client. 1.11 Describe how you would retain and build the customer base when starting a new business (include an explanation as to how you would establish this – i.e. a SWOT analysis, business plan etc.) ASSIGNMENT 2 FOR: Unit Standard Numbers - 8989 + 8997 For your assignment you are to obtain three domestic policy wordings from three different insurers, a Multimark 3 wording, and one niche product wording (e.g. fine arts or taxi) You are also to obtain a copy of an agreement between an intermediary and an insurer. This assignment is made up of 3 Different sections 2.1: Study the three domestic policy wordings; you will notice that each wording offers the similar types of cover. Yet each wording is different and in some way has a competitive advantage over the next. You are to draw up a table noting the different sections of each wording, then in separate columns note the difference in cover. e.g. Section Allsure Santam 747 Auto and General Houseowners Householders Motor 2.2: Write an essay explaining short term insurance. In your essay you are to mention the following concepts: - Identify the players in the market and explain the role of each one. I.E: Insurer, intermediary, Insured and underwriting managers - Give a brief definition of short term insurance - Explain self insurance and give an example of when a client mat chose to self insure 2.3 You must now speak to a portfolio manager in your organisation or from an insurance company. Ask him/her what their break-even point is and it is calculated. Then show the calculation and explain what each expense is for e.g. Re-insurance, admin expenses. You are also to obtain a copy of the short term insurance act and study the section pertaining to the solvency margin of an insurance company. Now write a short essay explaining what solvency margin is and how it is calculated. ASSIGNMENT 3 FOR: Unit Standard Numbers – 9005 + 10194 + 12164 Obtain copies of the following statutory insurance and acts: Workmen’s compensation Road Accident fund Unemployment fund Short term Insurance Act (No. 53 of 1998) Financial Advisory and Intermediary services act (act 37 of 2002) This assignment is divided into 3 different sections 3.1: (applies to workers compensation, road accident fund and unemployment) Read through the laws and then in your own words give an explanation of each one. In your explanation include the following: - to who does the law apply - the advantages of the laws - the extent of cover provided by the insurance that covers these laws. Just give a brief overview, it not necessary to go into detail 3.2: (applies to Short term insurance act) Read through the act and then in your own words give an explanation of each one: - the purpose of the short term act - the basic requirements of the act as they apply to insurers - how the act controls intermediaries - how the act regulates short term policies 3.3 (applies to FAIS) Read through the act and then in your own words give an explanation of each one: - the purpose of FAIS legislation - the authorization process ( in terms of licensing requirements, career paths affected and exemptions) - disclosure and conduct requirements - the mechanisms for enforcement and the implications of non compliance - the rights of recourse available to aggrieved clients ASSIGNMENT 4 FOR: Unit Standard Numbers –10366 & 9006 This assignment is made up of three sections 4.1: You are to obtain a completed proposal form from the underwriting department in your organisation. The prospective client must complete the proposal from and it must be a proposal for a domestic policy. Ensure that the proposal has house owners, household contents, unspecified all risks, and specified all risks and two motor vehicle sections. Prepare the proposal for capturing the policy on your in-house system. In order to do this you need to ensure that: 1) all sections of the proposal has been completed 2) if not, you need to obtain the missing information from the prospective insured 3) where required the relevant substantiating documentation is attached e.g. Proof of tracker Once you have prepared the data, you are required to load the policy onto your in house system. Ensure that your line manager observes you doing this. A policy schedule should now be printed, check it for accuracy, neatness and completeness. Once you are satisfied with the policy schedule, prepare it as if you were going to post it to the insured. 4.2: You are to obtain an endorsement noting changes that need to be effected on an existing policy. Prepare the documentation for capturing on your in-house system. In order to do this you need to ensure that: 1) you have all the information required to capture the endorsement 2) if not, you need to obtain the missing information from the insured Once you have all the information, you are required to load the endorsement onto your in-house system. Ensure that your line manager observes you doing this. An updated policy schedule should now be printed, check it for accuracy, neatness, completeness. Once you are happy with the policy schedule, prepare it as if you were going to post it to the insured. Draft an accompanying letter explaining to the client if any additional premium is required, how it was calculated and how the insured can pay the additional premium. (Give him all the options e.g. debit order, cheque) 4.3: Referring to the proposal in section 1, you are to submit an essay explaining the decision you made when underwriting the risks and the concepts you followed when coming to your decision. The following outcomes need to be discussed in your essay: a) Investigate the background and circumstances of the proposer - explain the concept of the proposer - explain the concept of risk in terms of short term insurance - explain the effect age can have on the premium - explain moral and lifestyle factors and how they could how these can be addressed in an underwriting contract b) Analyse the assets and liabilities of the proposal - explain the concept of insurable interest - explain how location, value, use/occupation and type can effect the risk - explain why certain of the specified items are classified as either high, medium and low - explain the hazards and protections that could affect the risk c) Investigate the loss history of the proposer - explain why the information of the insured is verified with the previous insurer - explain what corrective measures can be taken to reduce the risk - explain how the size and frequency of previous losses are ascertained d) Make an underwriting decision for a short term domestic risk - explain why the decision was made to accept or decline the risk - explain the factors that were taken into account when determining the premium - explain the concept of excess and self insurance - explain the concept of underwriting criteria and attach a copy of the criteria you used e) Describe re-insurance in domestic insurance - explain the concept of retention limits and note the limits were used for this assignment f) Describe how the law of contracts applies to insurance in terms of: - The parties involved (assuming a broker is involved) - the legal capacity in an insurance contract - the basic principles required for an insurance contract to be legally binding ASSIGNMENT 5 FOR: Unit Standard Number –8994 For this assignment you are to assess the risk in your own life. A brief essay will suffice, points you are to cover in the essay are: - Identify an opportunity in your life (it need not be work related) - Indicate the consequences of following the opportunity - State what precautions you can follow to minimize any risk and allow you to follow the opportunity. - Identify a risk in your life (e.g. you may be a smoker, you may drive to fast) - Evaluate the risk - for this you need to ensure that you have reliable information - Describe how you are going to control the risk in your life ASSIGNMENT 6 FOR: Unit Standard Number – 8987 You are to draw up a survey questionnaire relating to the insurance requirements of an individual. Questions in the survey can relate to: 1) Assets 2) Value of assets 3) Use of assets 4) Possibility of replacing the asset 5) Risks in their lives 6) etc Now do a survey on two people either in your office or one of your friends or relatives. Once you have done the survey: 1) Decide which of their risks are insurable and which are not. Explain your decision. 2) Advise which insurance product available on the market you would recommend to each person. 3) Recommend which class of insurance you would offer (e.g. motor, all risks) 4) Explain to each person the condition of average and give an example showing the calculation ASSIGNMENT 7 FOR: Unit Standard Number –12168 7.1: Consult with various resources and in a table format indicate the various services in the financial services industry and their differences and similarities. e.g.: SERVICE DIFFERENCES SIMILARITIES Commercial Banks Merchant Banks Long Term Insurance Unit Trusts Etc 7.2: Identify five events and risks that can be insured. Now explain the advantages of insurance in relation to a specific business entity. Complete your answer in a table format. E.G. Events/Risk Advantage Business Entity. 7.3: You will need to obtain some type of contract of insurance from a business entity to answer the following questions. It is important for you to analyse the document and then consult any further resources if required. Now in your own words please record your answers to these questions: Explain the purpose of a contract with reference to an actual policy Explain the purpose of a portfolio and indicate the characteristics of the portfolio Explain the term “endorsement” and give examples of endorsements that can be found in the contract Explain the main rights and responsibilities of the insured in terms of a complex business insurance contract and the need for reinsurance. ASSIGNMENT 8 FOR: Unit Standard Number – 10363 You are to get as many articles and reports from current print and electronic material relating to the structure or administration of insurance. Summarise the article and give an explanation on how the reported events could impact on a class of short term insurance in South Africa. Express your own views on the subject matter. Remember, these are your own views and can neither be wrong nor right. You are also to report on any latest development in technology. Give an explanation on how you think this technology could impact on short term insurance. Give a list of pros and cons of the new technology, and indicate if it would have any effect on crime and accident prevention. ASSIGNMENT 9 FOR: Unit Standard Numbers – 10364 You are to obtain a copy of the SASRIA policy wording, and speak to senior people in the insurance industry. Now make brief notes on the following: a) The origin of SASRIA insurance b) Describe the cover provided by SASRIA against the war exclusion in South Africa c) Identify the territorial limits d) Describe the terms and conditions of SASRIA cover ASSIGNMENT 10 FOR: Unit Standard Numbers – 13954 + 10387 For this assignment you are to assess the risk in your own work/business environment. The assignment is made up of three sections: 10.1: Using your own role within your business/work environment complete the following; List your responsibilities and the outputs you are required to produce The quality requirements for each responsibility and how they are related to legislation and/or industry standards. Describe the implication of not performing to the required standards on you as an individual and on the company you work for. Describe the implications of exceeding the quality requirements both for you as an individual and the company you work for. 10.2: Write an essay describing a work procedure within your organisation: Elaborate on the risk associated with non-compliance of these procedures Suggest ways in which the risk could be managed Recommend what could be done to minimize the risk Indicate which sources could be used to verify that the procedures have been followed. Comment on the importance that the company verifies the procedures on an ongoing basis. 10.3: Compile your own code of conduct within the workplace to mange the risk associated with employee’s attitude and behaviors: Analyse this code and indicate the upside risk and what positive spin off it may have Describe a situation where you do not believe the code has been upheld. ASSIGNMENT 11 FOR: Unit Standard Number – 10367 Obtain closings and brokers notes relating to a manufacturing risk. The classes of risk to be insured need to include, fire, office contents, business interruption, accounts receivable, theft of money, glass and goods in transit, all risks accidental damage, liability, commercial motor, group personal accident and electronic equipment. Your assignment is to underwrite this risk and submit a policy schedule, policy wording and a covering letter to the broker or client. You are also required to submit a report explaining the decisions you made when underwriting the risk and the concepts followed when coming to your decisions. The following outcomes need to be discussed in your report 11.1 Investigate the background and circumstances of the commercial and industrial proposer: Explain the concept of the proposer Explain the concept of the insured Explain the concept of insurable interest and subject matter Explain the circumstances under which a company/organisation can be a proposer under the Multimark™ policy. Explain the factors considered which pose as a high risk and why, with reference to underwriting notes/broker notes Explain location, environmental and health and safety factors which may indicate high risk and how they would be addressed in the underwriting contract Explain the Legal Liability risks that are apparent Give a synopsis in terms of your company’ underwriting criteria Analyse the survey report and explain your conclusions 11.2 Investigate the loss history of the commercial and industrial proposer: Explain how you verified the information in the underwriting notes/closings Explain how you requested additional information on previous losses and what measures you took to reduce the risk Explain your interpretation of the claims trend, with reference to low frequency high risk and high frequency low risk. 11.3 Make an underwriting decision for the risk you have selected: Explain why the decision was made to accept or decline the risk Explain the factors that were taken into account in determining the premium Explain the concepts of excess, deductibles and self-insurance relating to the Multimark™ policy document. Present a quote including the terms and conditions, Explain how you have used your company’s underwriting criteria to determine the need for reinsurance. Explain the concept of underwriting retentions and reinsurance and indicate the relationship between the two. 11.4 Generate a contract for the risk using the Multimark™ pre-wording: Write or present to the client, their contract, explaining the covers in terms of the multimark™ wording for each section of the cover selected. Ensure you select the relevant policy sections from the multimark™ Sequence the sections correctly to ensure they correlate with the schedule ASSIGNMENT 12 FOR: Unit Standard Number – 10376 + 10362 12.1: Your assignment is to obtain a copy of a multimark™ policy. Survey three different clients and analyse their needs in relation to their short term insurance. You must then prepare a presentation for the clients, which should include the following: Describe the difference between personal insurance and commercial insurance with reference to, use, a business run from home, building risks and work processes effecting rating structures. (i.e. occupation of building) Describe the main classes used in commercial insurance. Describe the sections of the Multimark™ policy to them, detailing the defined events covered by the fire, accident, motor and liability classes. Recommend the type of short term contract needed Explain to them customised products that are available for corporate organisations /corporate risks and compare commercial and corporate risks in terms of service and processes Explain the different products that are available for different niche markets. Your presentation may be in the format of: Presentation pack Power point presentation (with notes) (save your presentation on a virus-free disk or CD and include in your portfolio of evidence) 12.2: Your assignment is to find a large risk which you have on your company’s books. This risk will need to have surplus treaty reinsurance applicable. You will also need the survey report to complete this assignment. Please complete the following: Describe the workings of the treaty applicable to this risk and present this graphically Describe the consequences of not reinsuring this risk Describe the procedure which would have been followed should the risk have exceeded the treaty arrangements Analyse the survey document and describe the working of a reinsurance cession to the surplus treaty, using the EML/PML calculations in the survey report.