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ST PAUL’S UNIVERSITY – NAIROBI CAMPUS

BACHELOR OF COMMERCE
BCFI 401 – INSURANCE RISK MANAGEMENT
WRITTEN ASSIGNMENT NO 1 FOR JAN-APRIL 2023
Instructions: You are required to careful study the case below and write your assignment in
accordance with the instructions provided below the case.

THE CASE
Rubicon Chemicals Ltd have proposed for various insurance policies covering their chemical
plant in Nairobi. The insurers have discovered that Rubicon management had given scanty
details on some of the critical hazards facing the plant.

They have instructed your firm M/S Modern Risk Solutions Ltd, to write a risk report on the
plant before they can make a decision on accepting the risks. You have been assigned to this task
by your boss.

The following details are available under each category of the four risks presented for insurance.

REQUIRED

Using your knowledge of insurance risk management learnt in class; write a brief risk report to
the insurers on each of the following risk areas. Recommend whether the risks can be accepted
or rejected and outline the steps that require to be taken in the light of the information provided
under each case, giving reasons for your answer.

A)  FIRE & PERILS RISKS – Rubicon reported five “mild” fire incidents in the last three years.
The company says they are in the process of securing fire extinguishers from India and
meanwhile all employees have been asked via a memo to be extra careful to avoid any fire
inception hazards. There are no anti-smoking signs on the premises and the last fire drill was
done five years ago. The plant supervisor claims that the firm has functioning water hose reels
and a 10,000 cubic meter water storage tank on the roof top. Efforts to obtain the trapdoor key to
the roof top proved futile as the plant manager who reportedly kept the key was said to be away
even though he had been notified of the risk survey visit two weeks earlier.            (10 marks)

© Ezekiel Kimosop – Insurance Risk Management 2023

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B)  THEFT RISKS - Rubicon hired Bravo Security Ltd to provide protective services but have
had to terminate their services last June after two robbery incidents at night. They have decided
to hire local Masai herdsmen with bows and arrows to guard the premises at night and hope that
the risk status will improve. The theft alarm device was deactivated by Bravo upon termination
of their services and the nearest police station is 10 Kilometers away. The security fence is
reasonably high but the security lighting within the factory yard supplied by two energy saver
fluorescent tubes was weak. (10 marks)

C) ACCIDENTAL INJURY RISKS - No major injuries had been reported except in January
when two employees were injured by a chemical exposure after they failed to wear protective
clothing. Rubicon insists that all employees have been cautioned following the incident. The
employees admit that they have never been trained on safety regulations and evacuation
procedures but the plant manager later denies this claim when reached on phone. The employees
also fear for their lives because of the possible impact of their continued exposure to harmful
chemicals following the hospitalization of three employees on respiratory tract and chest
complications.                                                                              (10 marks)

D)  ENGINEERING MACHINERY BREAKDOWN RISKS. -

Rubicon admits that they have exceeded only 500 hours on two of the five main generator plants
because they have to meet the rising demand for their chemicals in the new market in South
Sudan. They claim that manufacturer’s manual and maintenance records have been misplaced
and insist that no breakdowns have been reported in the last 5 years of operation.  The manager
could not confirm the name of their previous insurers. He undertook to write a letter to confirm
after checking the records but one of the officials provided the details of the insurers which
confirmed that indeed there were no major breakdown incidents (10 Marks)

INSTRUCTIONS ON ASSIGNMENT

a) This assignment should be done using Times Roman font 12 on 1.5 line spacing and must
cover a minimum of five pages excluding the title page and the reference page.
b) The work should be free from any typesetting, typographical and spell check errors.
c) The answers should be analytically and logically presented, well researched and concise.

© Ezekiel Kimosop – Insurance Risk Management 2023

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d) Reference sources quoted in the assignment must be cited correctly using official SPU
referencing and citation format.
e) Creativity and individual effort is required. Any copying or sharing of assignment
answers will automatically lead to loss of marks on those affected.
f) The Assignment should contain the student’s full names and full registration number
g) The assignment must be submitted to me ONLINE via my email address
ekimosop@midline.co.ke so as to be received on or before Friday 2nd March 2023. No
hard copies will be accepted. Any assignment submitted after this date will not be graded.

© Ezekiel Kimosop – Insurance Risk Management 2023