CAIB 4 -BOOK PRACTICE ACTUAL EXAM COMPLETE
QUESTIONS AND CORRECT DETAILED ANSWERS
(VERIFIED ANSWERS) |ALREADY GRADED
A+||BRAND NEW.
Some brokerages effectively structure their brokerages as a functional
organization. Discuss why it is a difficult form to implement effectively
✔✔CORRECT ANSWER✔✔Employees will find that they have more than
one boss, so that in areas of overlapping authority they may be given
conflicting or inconsistent instructions.
When a decision is required that does not firmly belong to any manager,
decision-making can be slow. Employees may be referred by one
manager to another without any decision being made.
When there are too many managers giving instructions, employees are
frequently distracted from their primary roles of serving their clients.
The first activity in human resources management is planning. Discuss
three areas involved ✔✔CORRECT ANSWER✔✔Evaluate its existing
ability to generate sales and premium growth, and determine whether
the existing human resources are capable of producing the levels
anticipated in the strategic plan. If they are not, a plan must be
established to obtain the necessary human resources and to revise the
organization structure to accommodate the anticipated growth.
,Industry experience has shown that it may not always be effective to
have multiple company representation. Discuss why not. ✔✔CORRECT
ANSWER✔✔Multiple company representation is ineffective due to;
o Too many rate manuals
o Too many procedures to keep track of
o Greater premium volumes can be maintained with fewer companies
o Stronger relationships with insurer representatives
Insurance companies must examine many factors when deciding
whether or not a particular brokerage is suitable to represent them.
Discuss five factors that will affect an insurance company's decision
when determining which brokerage will represent them. ✔✔CORRECT
ANSWER✔✔Premises
Insurance companies interested in high volume of new business will
want an office that is easily accessible to the public and which is located
in an area conducive to growth.
Neatness and organization project a professional image. When all other
things are equal, these first impressions can be extremely important.
Financial information
Consistent history of profitable operations
Past & current financial information
, Collection practices
Type and mix of business
Brokerages that have an established book of business on the types and
risks written by the insurance company would be most attractive
candidates for a contract
Other insurance companies represented
Too many insurance companies represented by the brokerage may
indicate that the brokerage will not be able to place and maintain the
required volume with the new insurance company.
Loss experience
The two key loss measures are severity (the size of the loss) and
frequency (the number of losses).
Insurance companies will usually understand when a high loss ratio is
the result of a single large loss. However, if the brokerage has a
continuing high loss ratio, or if it is the result of a series of smaller
losses, poor screening, or underwriting practices on the part of
producers, the insurer may not wish to offer a contract to the
brokerage.
Human resources
QUESTIONS AND CORRECT DETAILED ANSWERS
(VERIFIED ANSWERS) |ALREADY GRADED
A+||BRAND NEW.
Some brokerages effectively structure their brokerages as a functional
organization. Discuss why it is a difficult form to implement effectively
✔✔CORRECT ANSWER✔✔Employees will find that they have more than
one boss, so that in areas of overlapping authority they may be given
conflicting or inconsistent instructions.
When a decision is required that does not firmly belong to any manager,
decision-making can be slow. Employees may be referred by one
manager to another without any decision being made.
When there are too many managers giving instructions, employees are
frequently distracted from their primary roles of serving their clients.
The first activity in human resources management is planning. Discuss
three areas involved ✔✔CORRECT ANSWER✔✔Evaluate its existing
ability to generate sales and premium growth, and determine whether
the existing human resources are capable of producing the levels
anticipated in the strategic plan. If they are not, a plan must be
established to obtain the necessary human resources and to revise the
organization structure to accommodate the anticipated growth.
,Industry experience has shown that it may not always be effective to
have multiple company representation. Discuss why not. ✔✔CORRECT
ANSWER✔✔Multiple company representation is ineffective due to;
o Too many rate manuals
o Too many procedures to keep track of
o Greater premium volumes can be maintained with fewer companies
o Stronger relationships with insurer representatives
Insurance companies must examine many factors when deciding
whether or not a particular brokerage is suitable to represent them.
Discuss five factors that will affect an insurance company's decision
when determining which brokerage will represent them. ✔✔CORRECT
ANSWER✔✔Premises
Insurance companies interested in high volume of new business will
want an office that is easily accessible to the public and which is located
in an area conducive to growth.
Neatness and organization project a professional image. When all other
things are equal, these first impressions can be extremely important.
Financial information
Consistent history of profitable operations
Past & current financial information
, Collection practices
Type and mix of business
Brokerages that have an established book of business on the types and
risks written by the insurance company would be most attractive
candidates for a contract
Other insurance companies represented
Too many insurance companies represented by the brokerage may
indicate that the brokerage will not be able to place and maintain the
required volume with the new insurance company.
Loss experience
The two key loss measures are severity (the size of the loss) and
frequency (the number of losses).
Insurance companies will usually understand when a high loss ratio is
the result of a single large loss. However, if the brokerage has a
continuing high loss ratio, or if it is the result of a series of smaller
losses, poor screening, or underwriting practices on the part of
producers, the insurer may not wish to offer a contract to the
brokerage.
Human resources
