CIC AGENCY MANAGEMENT ALL LESSONS
2026 FINAL PAPER EXAM PREP QUESTIONS
AND SOLUTIONS
◉ Impact of Federal & State Regulations on Agencies. Answer: Why
do we have regulations?
-To make sure we keep promises
-Interstate Commerce
-Consumer Protection
-Viable Insurance Marketplace
◉ Characteristics of the 5 stages of Agency Growth. Answer:
(ESSTM)
1. Existence - agency struggle, must be creative to move, basic staff,
owner does everything
2. Survival - Ongoing concern, must have direction to grow, owner
heavily involved, balance revenues & expenses.
3. Success - Profitable, can stay or grow, must be sales oriented to
grow, owner not as involved.
,4. Take-Off - Expands quickly, coordination to grow, increase staff,
$=People, Delegation no longer and option
5. Maturity - Developed, tends to be large, focus on $ & planning
◉ Types of Company Markets available to agents. Answer: Standard
Markets
-Stock - Owned by Stockholders
-Mutual - Owned by policyholders
-Direct writers - exclusive
Alternative Markets
-Excess Surplus
- MGA's
- Brokerage
- SIFs
◉ Company - Agency Agreement. Answer: Commissions, Ownership,
Contingency, Agency Authority, Agency or Direct Bill.
How many companies? Few vs Many?
Volume & Volume requirements, Financial Stability, personnel,
support, claims pay
, ◉ Company expectations of an agency. Answer: Track record of
business & sales success management, growth plan, sales culture,
assertive, successful, marketing focus & plan, staff, low loss ratio,
high close ration.
◉ Factors that positively/negatively impact agency value. Answer:
Profitability, retention ration, commissions, producer compensation,
personnel quality, Markets, E&O etc.
◉ Income Statement. Answer: *Shows the revenues & expenses of
the agency over time.
Components - Commissions, fee income, other income,
compensation expenses, selling expenses & managing expenses
◉ SPREAD. Answer: *The difference between revenues per
employee & compensation per employee.
Larger spread = Higher Productivity
(Revenues per employee) - (Compensation per employee) = Spread
Spread - What is left to pay expenses
2026 FINAL PAPER EXAM PREP QUESTIONS
AND SOLUTIONS
◉ Impact of Federal & State Regulations on Agencies. Answer: Why
do we have regulations?
-To make sure we keep promises
-Interstate Commerce
-Consumer Protection
-Viable Insurance Marketplace
◉ Characteristics of the 5 stages of Agency Growth. Answer:
(ESSTM)
1. Existence - agency struggle, must be creative to move, basic staff,
owner does everything
2. Survival - Ongoing concern, must have direction to grow, owner
heavily involved, balance revenues & expenses.
3. Success - Profitable, can stay or grow, must be sales oriented to
grow, owner not as involved.
,4. Take-Off - Expands quickly, coordination to grow, increase staff,
$=People, Delegation no longer and option
5. Maturity - Developed, tends to be large, focus on $ & planning
◉ Types of Company Markets available to agents. Answer: Standard
Markets
-Stock - Owned by Stockholders
-Mutual - Owned by policyholders
-Direct writers - exclusive
Alternative Markets
-Excess Surplus
- MGA's
- Brokerage
- SIFs
◉ Company - Agency Agreement. Answer: Commissions, Ownership,
Contingency, Agency Authority, Agency or Direct Bill.
How many companies? Few vs Many?
Volume & Volume requirements, Financial Stability, personnel,
support, claims pay
, ◉ Company expectations of an agency. Answer: Track record of
business & sales success management, growth plan, sales culture,
assertive, successful, marketing focus & plan, staff, low loss ratio,
high close ration.
◉ Factors that positively/negatively impact agency value. Answer:
Profitability, retention ration, commissions, producer compensation,
personnel quality, Markets, E&O etc.
◉ Income Statement. Answer: *Shows the revenues & expenses of
the agency over time.
Components - Commissions, fee income, other income,
compensation expenses, selling expenses & managing expenses
◉ SPREAD. Answer: *The difference between revenues per
employee & compensation per employee.
Larger spread = Higher Productivity
(Revenues per employee) - (Compensation per employee) = Spread
Spread - What is left to pay expenses
