ABSTRACT
This research work focused on the development of a risk management system for insurance industries. The research work was necessary because the following problems were found in the existing system: absence of a web-based system to manage insurance risk management records, there is lack of effective data storage mechanism for insurance records and with the manual system, it is difficult for the management to regularly update and obtain reports of insurance risk management records. In view of solving these problems, the objectives of the study include to design an efficient and reliable web-based system for documentation of insurance activities and to to implement a system that will enable insurance services to easily manage insurance records. The significance of the study is that it will provide a web-based system for easy management of insurance, it will aid the easy keeping and retrieval of insurance information of clients. The software development methodology employed for the development of the system is Object Oriented Analysis and Design Model (OOADM).The programming language used is PHP (pHp Hypertext Pre-processor) and the database used is MYSQL.
CHAPTER ONE
INTRODUCTION
1.0 Introduction
This chapter is focused on the introduction to development of risk management system for insurance industries. It presents the introduction, background of the study, statement of the problem, aim and objectives of the study, significance of the study, scope of the study, organization of the research and definition of terms.
1.1 Background of the Study
The definition of the term “insurance” given in the dictionary by S.I. Ozhegov and N.Yu.Shvedova is as follows: “Insurance is preventing material losses by payment to the institution,which undertakes to reimburse any damage incurred in specially stipulated cases”. To be able to coverlosses and remain competitive, an insurance company must focus its efforts on those services thatbring maximum profit. Insurance can also be seen as the pooling of fortuitous losses by transfer of such risks to insurers, who agree to indemnify insured’s for such losses, to provide other pecuniary benefits on their occurrence , or to render services connected with the risk. Among the most important problems in the sphere of management of an insurance business, there are the problems of financial stability and solvency of insurance companies (Sanford, 2007). The latter work considers their financial stability in both microeconomic and macroeconomic senses by the example of Spain, where a combination of changes in monetary policy and the growing insolvency of insurance companies has led to the need for more complicated accounting methods and management. The monitoring and evaluation of the financial condition are important for both individual insurance companies and the insurance market in general. The financial condition of the insurance market, as shown in (Gans, 2001) (for the part of the insurance market that does not include life insurance), is in bidirectional communication with the finance market. Mutual random and tendentious impacts of the financial and insurance markets, modeled by the authors, show the importance of improving the information support of decision-making in insurance companies worldwide. Thus, the author will consider the solution of the problem of improving management accounting in insurance companies by improving the quality of information provision and decision support for risk management.
Risk is uncertainty concerning the occurrence of a loss or events which might produce a loss (an event) . Losses are measured in financial terms. Managing risk involves decision making under uncertainty. Losses can be analyzed according to: Probability or Chance – how likely, peril – immediate cause of a loss e.g, fire, theft, death. Frequency – how often, severity – how much in financial terms when it occurs and total financial amount losses in a time period.