Module 1:Fundamentals

of Business当代商学概论

Lecture 10: Insurance

and Business Law保险与商法

What to cover today ：

1. Business risks

2. Insurance

3. Business law

Exercises

1. Business risks

Risk management 风险管理 is:-- the practice of appraising and controlling risk

International risks: Financial risks: balance-of-payments consideratio

ns, varying exchange rates, differential inflation trends, divergent interest rates

Political risks: expropriation or lesser harassment directed toward the foreign firm

Regulatory risks: different legal systems, overlapping jurisdictions, dissimilar policies to regulate restrictive business practices

Tax risks: unforeseen changes in tax and fiscal policies

Approaches to managing business risks:

Avoiding the risk Controlling the risk Assuming the risk Shifting the risk: hedging and insurance

Hedging 套期保值 / 对冲买卖 is:

-- a position established in one market in an attempt to offset exposure to price fluctuations in some opposite position in another market with the goal of minimizing one's exposure to unwanted risk

指把期货 (futures) 市场当作转移价格风险的场所，利用期货合约作为将来在现货 (spot goods) 市场上买卖商品的临时替代物，对其现在买进准备以后售出商品或对将来需要买进商品的价格进行保险的交易活动

2. Insurance

Insurance 保险 is:

-- a defensive form of risk management primarily used to hedge against the risk of a contingent, uncertain loss in the future

-- the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment

Insurer 承保人 : a company selling the insurance Insured/policyholder 投保人 / 保户 : the person or ent

ity buying the insurance policy Insurance policy 保险合同 / 保单 : a contract of insura

nce between the insurer and the insured, describing the term 保险条款 , coverage 保险范围 , premiums 保费 and deductibles 免赔额

Insurance rate 保险费率 : a factor used to determine premium for a certain amount of insurance coverage 承保人按单位保险金额向投保人收取保险费的标准

insurance rate = premium / amount insured （费率 = 保险费 / 保险金额 ）

Listening: Concept and importance of insurance

Word bank:

reimbursement 赔付 helmet 头盔make good 补偿，赔偿 heir 继承人dispatch 派遣，发送

Task 1: Listen to the first passage and decide whether the following statements are true or false. (00:00)

1. If a person buys a type of insurance, then his future well-being will be insured.

2. If a biker always wears a helmet while riding, there is no necessity for him to buy insurance.

3. In some cases, insurance can quantify losses financially.

Task 2: Listen again and complete the summary.

The meaning of insurance is important to anybody who is considering buying an insurance policy. Insurance is a ______ instrument used as a ______ measure against future contingent losses. It means that the present ______ of the person or the property insured is not influenced by the loss of an accident. ______ and protection will be bought then.

To understand the meaning better, we’ll take a ______ for example. He is always subject to the risk of head injury, even though he accident causing him the head in jury will not ______ occur. Still, the biker wears a ______ acting as insurance by protecting him/her from any possible danger. The price paid was the possible ______or act of wearing the helmet; this is ______ to the insurance premiums paid.

Insurance can range from life to medical to general ( ______, commercial property, natural incidents, ______, etc.). A ______should pay relatively small, regular payments to the insuring body or insurance company.

Key:

Task 1: F, F, T

Task 2: hedging, precautionary, well-being, security, biker, definitely, helmet, inconvenience, equivalent, residential, ???, policyholder

Task 3: Listen to the second passage and list four reasons for the importance of insurance. (02:25)

Reason 1: _________________________Reason 2: _________________________Reason 3: _________________________Reason 4: _________________________

1. Insurance promotes savings.2. Insurance promotes investment.3. The insured person can get loans against the security of

the insurance policy from the insurance company or from the bank.

4. Insurance protects us against dangers to life and property.

2.1 Principles of insurance

The principle of insurable interest 可保利益原则

The principle of utmost good faith 最大诚信原则

The principle of indemnity 应得补偿原则 The principle of contribution 赔偿分摊原则 The principle of subrogation 权益转让原则 The principle of proximate cause 近因原则

2.2 Insurable risks

The risk can be calculated on the basis of past probabilities.

The insured loss is outside the control of the policyholder: a result of an accident, not of the intentional act of the insured.

The risk spreads over a broad geographic area so that it may happen in one or a few places but not everywhere.

The number of the would-be insurance purchasers is big enough and they come from all walks of life.

Listening: Rules for buying insurance

Word bank:

fritter away 在小事上浪费时间或金钱clunker 破车 A.M. Best 国际保险评级机构 go bust 生意失败 notch 等级，水平

legwork 外出搜集情况，跑腿 broker 保险经纪人

fib 撒小谎 ulcer 溃疡 haggle 争论不休 beef up 改进，充实

Task 1: Listen to the first part of the passage and fill in the table with detailed information. (08:22)

Rules Content Reasons

Rule 1 Buy insurance only for financial risks you can’t afford to bear on your own

The purpose of insurance is to ______

Rule 2 Buy from insurers rated A or Better by A.M. Best

Insurance companies ______, they are bought and sold, and they suffer the same ______ that all companies do.

Rule 3 Shop around There are many kinds of insurance policies, and you need to do some legwork to ______.

Rule 4 Never lie on a policy application

If you ______, the company can cancel your policy.

Task 2: Listen to the second part of the passage and list the other four rules for buying insurance. (11:35)

Rule 1: ___________________________

Rule 2: ___________________________

Rule 3: ___________________________

Rule 4: ___________________________

Key:

Task 1: 1. Over catastrophes2. Go bust, economic ???3. Match your needs with the cheapest possible policy4. Fib and get caught

Task 2: 1. Buy general policies instead of specific risk policies.2. Never cancel one policy until you have a

replacement.3. Get a high deductible.4. Use the money you save on insurance payment to

beef up your raining day account.

2.3 Types of insurance

2.3.1 Property insurance 财产险 -- provides protection against risks

to property, such as fire, theft or weather damage Fire insurance 火险 Marine and aviation insurance 海险和航空险 Business interruption insurance 营业中断险 : c

overs the loss of income and the expenses occurred after a covered peril that interrupts normal business operations

2.3.2 Liability insurance 责任险-- a very broad superset that covers legal claims lodged against the insured General liability 普通责任险 Workers’ compensation 工伤险 Automobile insurance 汽车险 Product Liability Insurance 产品责任险 : protects against fina

ncial loss as result of a defect product that cause injury or bodily harm

Companies that manufacture, wholesale, distribute, and retail a product may be liable for its safety.

The amount of insurance a firm should purchase depends on the products it sells or manufactures. E.g. a clothing store would have far less risk than a small appliance store.

When export to the U.S., a product liability insurance is needed by the local custom or government.

2.3.3 Health insurance 健康险 / 医疗险

2.3.4 Life insurance 寿险 Term life insurance 简单寿险 Straight life insurance 完全寿险 Limited payment life insurance 定期寿险 Endowment life insurance 增值寿险

Life insurance plans for business 企业寿险计划 Group life insurance 集团寿险 Key person insurance 关键人物险 Credit life insurance 信用寿险 Retirement and pension plans 退休养老险

2.3.5 Fidelity and Surety Bonds 忠实险与履行义务险

2.4 Rating insurance companies

Insurance companies are rated by various agencies such as A.M. Best.

The ratings include the company's financial strength, which measures its ability to pay claims. It also rates financial instruments issued by the insurance company, such as bonds, notes, and securitization products.

Case study:

A bolt from the blue

3. Business law

Common law 普通法 : found in most of Great Britain’s former colonies, including the U.S.; based on tradition, precedent 判例 and custom; a degree of flexibility, have the power to interpret the law; the common law system 英美法系

Statutory law 成文法 : found in most of the European continent, as well as Japan; based on a detailed set of laws organized into codes; less flexibility, have the power only to apply the law; the civil law system 大陆法系

Theocratic law 宗教法规 : based on religious teachings, e.g. Hindu, Jewish, and Islamic law (the most widely practiced theocratic law in the modern world); the theocratic law system 宗教法系

Regulatory law 行政法规

3.1 Contract law In a common law system, contracts tend to be very detailed with all contingencies spelled out. In a civil law system, contracts tend to much shorter and less sp

ecific as many of the issues are already covered in legal codes.

Which country’s laws are to apply when contract disputes arise in international trade?

Option 1: The United Nations Convention on Contracts for the International Sale of Goods (CIGS) 联合国国际货物销售合同公约

The CIGS was ratified by about 70 countries (including the U.S., but not Japan and the U.K.), and went into effect since 1988.

The CIGS established a uniform set of rules governing certain aspects of making and performing everyday commercial contracts across countries.

Option 2: arbitration 仲裁 by a recognized arbitration court

Five elements of an enforceable contract:

Lawful purposeCompetency of partiesVoluntary agreementConsiderationProper form

3.2 Tort law

Tort on negligence 过失侵权 Tort on intent 故意侵权

Product liability tort 产品责任侵权

3.3 Property law

Three types of property (Tangible) real property ( 有形 ) 不动产 Personal property 动产 : tangible personal property

有形动产 vs. intangible personal property 无形动产 Five rules of title transfer: COD 货到付款 , FOB 离

岸价

Three types of intellectual property Trademark 商标 Copyright 版权 Patent 专利

3.4 Agency law

Principal 委托人 and agent 代理人 Agent: insider, outsider Appointment: Written: power of attorney 委任状 Verbal Source of authority: Express Implied Acting with apparent authority

3.5 Bankruptcy law Petition for bankruptcy 破产申请 Voluntary bankruptcy 自愿破产 vs. involuntary b

ankruptcy 强制破产 : As a threshold matter, bankruptcy cases are either v

oluntary or involuntary. In voluntary bankruptcy cases, which account for the overwhelming majority of cases, debtors petition the bankruptcy court 破产法庭 . With involuntary bankruptcy, creditors, rather than the debtor, file the petition in bankruptcy.

Involuntary petitions are rare, however, occasionally used in business settings to force a company into bankruptcy so that creditors can enforce their rights.

Referee 调解人 Trustee 托管人 : The United States Attorney General appoints a

separate United States Trustee for each of twenty-one geographical regions for a five year term.

Each Trustee is removable from office by, and works under the general supervision of the Attorney General.

Extension agreement 延展协议 and composition agreement 构成协议

Reorganization 重组

Exercises

1. Translation(1) 投保人 (2) 承保人(3) 保单 (4) 寿险(5) 普通法 (6) 成文法(7) 动产 (8) 不动产(9) 侵权 (10) 仲裁(11) 委托人 (12) 代理人(13) 托管人 (14) 重组

2. Group project: The rampant violation of intellectual

properties in China has long been severely criticized by the international community. Collect examples of malicious use of others’ trademarks, copyright or patent without proper authorization that you may observe in your daily life, and analyze the reasons behind such illegal acts.

3. Supplementary reading

(1) Starbucks Wins Key Trademark Case in China

(2) Host Country Political and Legal Environment