Lesson Note on Insurance: Risks, Contract Procedures and Importance to Business for SS 2

Class: Senior Secondary School 2 (SS2 / SSS 2)
Term: First Term
Week: 12
Age: 16 years
Duration: 45 minutes
Subject: Commerce
Curriculum Theme: Financial Services
Previous Lesson: Marine Insurance: Policies, Losses and Re-Insurance.
Topic: INSURANCE CONTD
Subject Matter: Types of risks (fundamental, particular risks), procedures for insurance contract (inquiry, proposal form, premium, cover notes), role of insurance broker and agents, importance of insurance to business.

Specific Objectives

By the end of the lesson, pupils should be able to:

Cognitive Domain:

• Define fundamental and particular risks.
• Outline the procedures for an insurance contract.
• Differentiate between an insurance broker and an insurance agent.
• List the importance of insurance to businesses.

Affective Domain:

• Appreciate the role of insurance in managing business risks.
• Recognize the value of adhering to insurance contract procedures.

Psychomotor Domain:

• Illustrate the steps involved in obtaining an insurance policy.
• Prepare a simple summary of the roles of brokers and agents.

Social Domain:

• Understand how insurance contributes to economic stability and business growth.

Reference Materials

The following resources were used in planning this lesson:

• Senior Secondary Schools Education Curriculum
• State Unified Scheme of Work
• Anyanwuocha, R. A. (2018). Comprehensive Commerce for Senior Secondary Schools. A. Johnson Publishers Ltd.

Instructional Materials

The teacher will teach this lesson with the aid of:

• Charts illustrating types of risks.
• Pictures showing different insurance policies.
• Posters depicting the insurance contract process.

Rationale for the Lesson

This lesson helps pupils understand the different types of risks that can be insured and the proper steps to take when acquiring an insurance policy. It also enables them to appreciate the importance of insurance for business operations and stability in the economy.

Prerequisite/Previous Knowledge

Pupils have a basic understanding of what insurance is and its general purpose.

Lesson Content/Board Summary

INSURANCE (CONTINUED)

Types of Risks

Risks are uncertainties that can lead to losses. In insurance, risks are generally classified into fundamental and particular risks.

• Fundamental Risks: These are risks that originate from social, economic, or political causes and affect a large number of people or the entire community. They are often uninsurable by private insurers due to their catastrophic potential and widespread impact.
  • Examples: War, inflation, unemployment, earthquakes, floods, epidemics.
• Particular Risks: These are risks that arise from individual causes and affect only individuals or small groups, not the entire community. They are generally insurable by private insurance companies.
  • Examples: Car accident, house fire, theft, personal illness, death.

Procedures for an Insurance Contract

An insurance contract is a legal agreement between an insurer and a policyholder. The process of obtaining an insurance policy typically involves the following steps:

1. Inquiry: The prospective policyholder contacts an insurance company or an insurance broker to get information about available policies and their terms.
2. Proposal Form: The applicant completes a proposal form provided by the insurer. This form requires the applicant to disclose all material facts related to the risk (based on the principle of utmost good faith).
3. Risk Assessment and Premium Calculation: The insurer evaluates the information provided in the proposal form to assess the level of risk involved. Based on this assessment, the premium (the amount payable for the insurance cover) is calculated.
4. Premium Payment: The applicant pays the calculated premium to the insurer. The insurance cover typically begins upon payment of the premium.
5. Issuance of Cover Note: For some policies, especially motor insurance, a cover note may be issued immediately after premium payment. This serves as temporary proof of insurance until the full policy document is prepared.
6. Issuance of Policy Document: The insurer issues the formal insurance policy document. This document contains all the terms, conditions, rights, and obligations of both the insurer and the policyholder.

Role of Insurance Brokers and Agents

Insurance brokers and agents are intermediaries who help individuals and businesses obtain insurance policies, but they represent different parties.

• Insurance Agent:
  • Represents one or a few specific insurance companies.
  • Works on commission from the insurance company.
  • Advises clients on the policies offered by the company they represent.
  • Acts on behalf of the insurer.
• Insurance Broker:
  • Represents the client (policyholder), not a specific insurance company.
  • Searches the entire insurance market to find the best policy and premium for the client.
  • Provides independent advice to the client based on their needs.
  • Acts on behalf of the insured.

Importance of Insurance to Business

Insurance plays a significant role in the smooth operation, stability, and growth of businesses. Its importance includes:

• Risk Management: Insurance helps businesses manage and mitigate financial losses arising from unforeseen events like fire, theft, accidents, or natural disasters.
• Business Continuity: It ensures that businesses can recover financially after a loss, enabling them to resume operations quickly and maintain continuity.
• Credit Support: Banks and other financial institutions often require businesses to have adequate insurance cover for assets used as collateral before granting loans.
• Employee Welfare: Businesses can provide group life insurance, health insurance, or workmen’s compensation cover for their employees, enhancing welfare and morale.
• Legal Compliance: Certain types of insurance, such as third-party motor insurance or workmen’s compensation insurance, are legally mandatory for businesses.
• Peace of Mind: Business owners gain peace of mind, allowing them to focus on core operations and growth strategies without constant worry about potential financial setbacks.
• Resource Allocation: By transferring risks to an insurer, businesses do not need to set aside large reserves for potential losses, freeing up capital for investment and expansion.

Teaching Methods/Instructional Techniques

Discussion, Lecture, Demonstration, Question and Answer, Visual Aids

Instructional Procedures

Step 1: Introduction

Time: 3 minutes
Teaching Skill: Set Induction
Teacher’s Activity: The teacher greets the pupils and asks them to recall what they learned about insurance in the previous lesson.
Pupils’ Activity: Pupils respond by sharing their understanding of insurance.
Learning Point: Pupils connect new learning with previous knowledge.

Step 2: Types of Risks

Time: 8 minutes
Teaching Skill: Explanation/Discussion
Teacher’s Activity: The teacher explains the two main types of risks: fundamental risks and particular risks, providing clear examples for each and leading a brief discussion.
Pupils’ Activity: Pupils listen attentively, ask questions for clarity, and identify examples of each risk type.
Learning Point: Pupils understand the distinction between fundamental and particular risks.

Step 3: Procedures for an Insurance Contract

Time: 10 minutes
Teaching Skill: Step-by-step Explanation
Teacher’s Activity: The teacher explains the step-by-step procedures involved in forming an insurance contract, from inquiry to the issuance of the policy document, using charts.
Pupils’ Activity: Pupils pay attention, take notes, and ask questions about each step.
Learning Point: Pupils can outline the process of obtaining an insurance policy.

Step 4: Role of Insurance Brokers and Agents

Time: 7 minutes
Teaching Skill: Comparative Explanation
Teacher’s Activity: The teacher explains the distinct roles of insurance brokers and insurance agents, highlighting their differences and why both are important.
Pupils’ Activity: Pupils listen, take notes, and identify the key differences between brokers and agents.
Learning Point: Pupils can differentiate between an insurance broker and an insurance agent.

Step 5: Importance of Insurance to Business

Time: 7 minutes
Teaching Skill: Discussion/Elaboration
Teacher’s Activity: The teacher discusses the various reasons why insurance is important for businesses, such as risk management, stability, and credit support.
Pupils’ Activity: Pupils contribute to the discussion by stating points and asking questions to deepen their understanding.
Learning Point: Pupils understand and can list the importance of insurance to businesses.

Step 6: Evaluation/Review

Time: 5 minutes
Teaching Skill: Questioning/Assessment
Teacher’s Activity: The teacher evaluates the learning by asking the following questions:

1. Differentiate between fundamental and particular risks, giving two examples for each.
2. Outline any three procedures involved in an insurance contract.
3. State two differences between an insurance broker and an insurance agent.
4. Mention three reasons why insurance is important to businesses.

Pupils’ Activity: Pupils answer orally and in writing.
Learning Point: Pupils demonstrate understanding of the lesson.

Step 7: Conclusion

Time: 3 minutes
Teaching Skill: Summarization
Teacher’s Activity: The teacher summarizes the key points of the lesson, reinforcing the concepts of risk types, contract procedures, roles of intermediaries, and the value of insurance.
Pupils’ Activity: Pupils listen and participate in the summary.
Learning Point: Pupils consolidate their understanding of the lesson.

Lesson Keywords

• Fundamental Risk – Risks affecting a large population or the entire economy, often uninsurable.
• Particular Risk – Risks affecting individuals or small groups, generally insurable.
• Proposal Form – A document filled by an applicant seeking insurance, disclosing material facts.
• Premium – The amount paid by the policyholder to the insurer for insurance coverage.
• Cover Note – A temporary document providing immediate proof of insurance cover before the full policy is issued.
• Insurance Broker – An intermediary who represents the client and seeks the best insurance policies from various companies.
• Insurance Agent – An intermediary who represents a specific insurance company and sells its policies.

Differentiation

The teacher will provide additional explanations and visual aids for pupils who may struggle with understanding the concepts. More advanced pupils will be encouraged to research and present on specific types of insurance policies.

Note for teachers using this lesson plan

Ensure that pupils understand the practical implications of each step in the insurance contract process. Encourage real-life examples to make the lesson more relatable and engaging. Emphasize the ethical considerations, such as utmost good faith, in insurance contracts.