Business Services | Long Questions | Business Studies | 1st Year / Class 11 – Commerce | AHSEC (Assam)

Business Services | Long Questions | Business Studies | 1st Year / Class 11 – Commerce | AHSEC (Assam)

Q. Explain the advantages of insurance to the business community. (5marks) (2015)

-> The advantages of insurance to the business community are as follows:-

  1. Providing certainty- Insurance provides certainty of payment at the uncertainty of loss. The uncertainty of loss can be reduced by better planning and administration.
  2. Protection- The second main function of insurance is to provide protection from probable chances of loss. Insurance cannot stop the happening of a risk or event but can compensate for losses arising out of it.
  3. Risk-Sharing- The risk is uncertain, and therefore, the loss arising from the risk is also uncertain. When risk takes place, the loss is shared by all the persons who are exposed to the risk.
  4. Assist in capital formation- The accumulated funds of the insurer received by way of premium payments made by the insured are invested in various income generating schemes.

Q. Explain five principles of insurance. (5marks) (2016)

-> Principles of insurance:-

1. Utmost good faith- It refers that no material or important facts should be concealed by both the parties of the insurance contract. Both parties involved in an insurance contract- the insured (policy holder) and the insurer (the company) – should act in good faith towards each other. The insurer and the insured must provide clear and concise information regarding the terms and conditions of the contract.

2. Insurable Interest- The insured must have an insurable interest in the subject matter of insurance. The insured must have an insurable interest in the subject matter of the insurance contract. The owner of the subject is sad to have an insurable interest until she/he is no longer the owner.

3. Indemnity- All insurance contracts of fire or marine insurance are contracts of indemnity. According to it, the insurer undertakes to put the insured, in the event of loss, in the same position that he occupied immediately before the happening of the event insured against. 

4. Proximate Cause- It refers to the direct cause and not the remote cause. According to this principle, an insurance policy is designed to provide compensation only for such losses as are caused by the perils which are stated in the policy. When the loss is the result of two or more causes, the proximate cause means the direct, the most dominant and most effective cause of which the loss is the natural consequence.

5. Migration- This principle states that it is the duty of the insured to take reasonable steps to minimise the loss or damage to the insured property. Suppose goods kept in a store house catch fire then the owner of the goods should try to recover the goods and save them from fire to minimise the loss or damage.

Q. Explain the basic features of services. (5marks) (2016)

-> The basic features of services are:-

  1. Intangibility- Services are intangible, i.e., they cannot be touched. They are experiential in nature. A service can be experienced by the buyer or the receiver. 
  2. Inconsistency- There can be no perfect standardization of services. Even if the service provider remains the same, the quality of the service may differ from time to time.
  3. Inseparability- Another important characteristic of services is the simultaneous activity of production and consumption being performed. This makes the production and consumption of services seem to be inseparable.
  4. Inventory- Services have little or no tangible components and therefore, cannot be stored for a future use. That is, services are perishable and providers can, at best store some associated goods but not the service itself. 
  5. Involvement- One of the most important characteristics of services is the participation of the customer in the service delivery process. A customer has the opportunity to get the services modified according to specific requirements.

Q. State three functions and five principles of insurance. (5+3=8) (2018)

-> Functions of insurance:-

1) Providing certainty- Insurance provides certainty of payment for the risk of loss. There are uncertainties of happenings of time and amount of loss.

2) Protection- The second main function of insurance is to provide protection from probable chances of loss.

3) Risk sharing- On the happening of a risk event, the loss is shared by all the persons exposed to it. The share is obtained from every insured member by way of premiums. 

Principles of insurance:-

1. Utmost good faith- It refers that no material or important facts should be concealed by both the parties of the insurance contract. Both parties involved in an insurance contract- the insured (policy holder) and the insurer (the company) – should act in good faith towards each other. The insurer and the insured must provide clear and concise information regarding the terms and conditions of the contract.

2. Insurable Interest- The insured must have an insurable interest in the subject matter of insurance. The insured must have an insurable interest in the subject matter of the insurance contract. The owner of the subject is sad to have an insurable interest until she/he is no longer the owner.

3. Indemnity- All insurance contracts of fire or marine insurance are contracts of indemnity. According to it, the insurer undertakes to put the insured, in the event of loss, in the same position that he occupied immediately before the happening of the event insured against. 

4. Proximate Cause- It refers to the direct cause and not the remote cause. According to this principle, an insurance policy is designed to provide compensation only for such losses as are caused by the perils which are stated in the policy. When the loss is the result of two or more causes, the proximate cause means the direct, the most dominant and most effective cause of which the loss is the natural consequence.

5. Migration- This principle states that it is the duty of the insured to take reasonable steps to minimise the loss or damage to the insured property. Suppose goods kept in a store house catch fire then the owner of the goods should try to recover the goods and save them from fire to minimise the loss or damage.

Q. Discuss three types and five distinctive natures of services. (3+5=8) (2018)

-> Three types of services are:-

1) Business Services- These are the services which are used by business enterprises for the management of their activities. For example, banking, insurance, transportation, warehousing and communication services.

2) Social Services- These are those services that are usually provided willingly in pursuit of certain social achievements. These achievements may be developing the status of living for weaker sections of society, to present educational services to their offspring, or to provide medical care and hygienic surroundings in slum areas.

3) Personal Services- These services differ from person to person. They cannot be uniform in nature. They differ according to the service provider. They also rest upon the customer’s choices and needs. 

Nature of services is:-

  1. Intangibility- Services are intangible, i.e., they cannot be touched. They are experiential in nature. A service can be experienced by the buyer or the receiver. 
  2. Inconsistency- There can be no perfect standardization of services. Even if the service provider remains the same, the quality of the service may differ from time to time.
  3. Inseparability- Another important characteristic of services is the simultaneous activity of production and consumption being performed. This makes the production and consumption of services seem to be inseparable.
  4. Inventory- Services have little or no tangible components and therefore, cannot be stored for a future use. That is, services are perishable and providers can, at best store some associated goods but not the service itself. 
  5. Involvement- One of the most important characteristics of services is the participation of the customer in the service delivery process. A customer has the opportunity to get the services modified according to specific requirements.

Q. Discuss the various facilities provided by a commercial bank to its customers. (5marks) (2019)

-> The various facilities by a commercial bank to its customers:- 

1. Acceptance of Deposits- It is the most important function of a bank. According to this function, the commercial bank accepts deposits from different individuals and organizations. The bank accepts deposits from them and provides all securities to them.

2. Making loans and advances-The second important function of a bank is advancing loans. The commercial bank earns interest by lending money.

3. Investment of funds- Besides loan and advances, banks also invest a part of its funds in govt. and industrial securities like govt. bills, share, debenture, etc from their market.

4. Credit Creations- The banks create credit. When a bank advances a loan, it does not give cash to the borrower. It opens an account in the name of the borrower. The borrower is allowed to withdraw money by cheque whenever he needs. This is known as Credit Creation.

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