CIC Agency Management - All Lessoons

CIC Agency Management - All Lessoons Explain the Organizational Structures available to Agencies - ANSWER Sales vs. Service Oriented Large Agencies vs. Small Agencies Publicly Traded vs. Privately Held Explain the Federal and State Regulations on Agencies - ANSWER Licensing Regulations by State Regulators protect the consumer by making a viable insurance marketplace and monitoring interstate commerce Five Stages of Agency Growth - ANSWER 1 - Existence - Owner does everything, must be creative to survive 2 - Survival - management heavily involved, needs specific direction to grow, trying to make a profit 3 - Success - Agency is profitable, stable renewals, service oriented 4 - Take Off - careful coordination required to grow, increased staffing needs 5 - Maturity - collaboration/integrity, strategic goals, decentralized Describe how, when and why Agencies move from one Agency Growth Stage to the next - ANSWER Agency Owner must make all pieces of the puzzle fit together Agency Organization Financials HR Productivity and Effectiveness Sales/Service etc. Compare the various types of Markets available to Insurance Agencies - ANSWER Standard Markets - Stock Companies, Mutual Companies, Direct Writers Excess/Surplus Lines, MGAs, Self Insurance Funds, Captive Arrangements Describe the Carrier expectations of an Agency - ANSWER Proven Record of Sales/Business Success Competent Management Identifiable Sales Culture Professional Service Staff Low Loss Ratios, High Closing Costs Identify the Important elements of a Company-Agency Agreement and Considerations when selecting a Carrier to represent - ANSWER Agency Contracts -Commission Structure -Ownership of Business -Billing -Contingencies/Profit Sharing Selecting a Carrier -financial stability -personnel -products -Company Support Describe the Factors positively or negatively impacting Agency Value - ANSWER Agency Profitability Retention Ratio Quality of Personnel Public Image Company Markets Explain the purpose, use and components of an Income Statement - ANSWER Revenues + Expenses over a period of time Good way to analyze expenses and identify areas to reduce costs, establish a budget, ensure expense rate is less than growth rate Define the purpose and concept of spread and demonstrate how it is calculated - ANSWER Spread = Revenue per Employee / Compensation per Employee Spread is what is left over to pay non-compensation expenses and for profit Describe the purpose, use and components of a Balance Sheet - ANSWER Shows what an agency OWNS and OWES at a specific point in time Types of Assets -current - Cash, Accounts Receivable Fixed - land, buildings, autos Type of Liabilities -Accounts Payable -Payroll Taxes -Notes due within 12 months Explain the concept and purpose of liquidity ratios and demonstrate how they are calculated - ANSWER Trust Ratio - measures ability of agency to pay carriers Cash + Premium Receivables / Premium Payable + Pre-Billed Payable Current Ratio - measures ability of agency to pay its current liabilities, Ratio close to or less than 1 is bad Summarize the Basics of Cash Flow in an Agency - ANSWER Trust Account IN: Premiums Trust Account OUT: Company premium payable, commissions Operating Account IN: Commissions from Trust, Direct Bill Commissions, Contingency income, Investment income Operating Account OUT: Compensations, Sales Expenses, Operating Expenses Accounts Receivable: Pay producers on collected, not commissions written Describe the Factors involved