CIC Agency Management questions with verified
answers
A) Identify the important elements of a company-agency agreement
and Ans✓✓✓ A) Agency contract
1. Commission schedule
2. Ownership of business
3. Contingency/profit sharing
4. Agency authority
5. Contract termination terms
6. Agency and direct bill responsibility
7. Notice of contract changes
B) How many companies
1. Fewer vs many - there cost involved in maintaining carrier
relationships - how many can you afford and can you be knowledgeable
about all markets
2. Maintaining relationship with companies
3. Agency volume- how much premium can we promise a carrier
4. Mix of business
5. Utilization of existing company markets
6. Company volume requirements
Account receivable Ans✓✓✓ Is agency collecting payments in a timely
manner to protect cash flow
,Agency situational analysis Ans✓✓✓ Drives the planning process
Requires staff involvement
Will say how company is doing relative to its objectives
Brings out areas needing improvement
Shows where agency excels
Areas of external analysis Ans✓✓✓ Competition
Regulatory environment
Economic trends
Market conditions
Consumer purchasing trends
Target market analysis
Areas of internal analysis Ans✓✓✓ Productivity analysis- employee
productivity, account development, account size, account per CSR
Financial analysis- profit margin, financial liquidity, collection system,
owner compensation
Accounts/clients - account retention, account size, quality of customer
service
,Company / market analysis- agency contracts, commission rates,
specialization, mix business, growth new business
Sales and support- producer compensation, staff compensation, sales
systems
Agency personnel- quality of personnel, employee productivity, product
expertise, staff education
Planning/ management/ organization
Agency operations/systems/workflows - quality customer service,
automation, E&O experience, documentation procedures
Areas to consider for objectives Ans✓✓✓ Markets/ companies
Target markets/niches
Staffing/human resources
Market territory
Automation / technology
Multiple locations
B) the considerations when selecting an insurance company to
represent. Ans✓✓✓ 1. Financial stability - Best rating and ability to pay
claims
, 2. Personnel- competence of staff and location
3. Products - policy forms, commission, product value and pricing,
consistency in market
4. Company support - marketing and advertising, lead generation,
specialty programs, and safety groups
5. Staff/field representative competency - timely and accurate,
promises kept, partner to offer client solutions, automation, and
professional communication
Balance sheet Ans✓✓✓ Shows what the agency owns and owes at a
specific point in time.
Captives Ans✓✓✓ Allows you to stabilize coverage for your specific
exposure while participating in the underwriting profit and investment
income.
Characteristics and issues of alternative markets Ans✓✓✓ 1. Non
standard forms used so you have to make sure coverages are included
2. What is their binding authority and process?
3. Minimum premium
4. E&O concerns -the client must understand reason for placement with
alternative markets and risk involved
5. Non contracted vs contracted market
answers
A) Identify the important elements of a company-agency agreement
and Ans✓✓✓ A) Agency contract
1. Commission schedule
2. Ownership of business
3. Contingency/profit sharing
4. Agency authority
5. Contract termination terms
6. Agency and direct bill responsibility
7. Notice of contract changes
B) How many companies
1. Fewer vs many - there cost involved in maintaining carrier
relationships - how many can you afford and can you be knowledgeable
about all markets
2. Maintaining relationship with companies
3. Agency volume- how much premium can we promise a carrier
4. Mix of business
5. Utilization of existing company markets
6. Company volume requirements
Account receivable Ans✓✓✓ Is agency collecting payments in a timely
manner to protect cash flow
,Agency situational analysis Ans✓✓✓ Drives the planning process
Requires staff involvement
Will say how company is doing relative to its objectives
Brings out areas needing improvement
Shows where agency excels
Areas of external analysis Ans✓✓✓ Competition
Regulatory environment
Economic trends
Market conditions
Consumer purchasing trends
Target market analysis
Areas of internal analysis Ans✓✓✓ Productivity analysis- employee
productivity, account development, account size, account per CSR
Financial analysis- profit margin, financial liquidity, collection system,
owner compensation
Accounts/clients - account retention, account size, quality of customer
service
,Company / market analysis- agency contracts, commission rates,
specialization, mix business, growth new business
Sales and support- producer compensation, staff compensation, sales
systems
Agency personnel- quality of personnel, employee productivity, product
expertise, staff education
Planning/ management/ organization
Agency operations/systems/workflows - quality customer service,
automation, E&O experience, documentation procedures
Areas to consider for objectives Ans✓✓✓ Markets/ companies
Target markets/niches
Staffing/human resources
Market territory
Automation / technology
Multiple locations
B) the considerations when selecting an insurance company to
represent. Ans✓✓✓ 1. Financial stability - Best rating and ability to pay
claims
, 2. Personnel- competence of staff and location
3. Products - policy forms, commission, product value and pricing,
consistency in market
4. Company support - marketing and advertising, lead generation,
specialty programs, and safety groups
5. Staff/field representative competency - timely and accurate,
promises kept, partner to offer client solutions, automation, and
professional communication
Balance sheet Ans✓✓✓ Shows what the agency owns and owes at a
specific point in time.
Captives Ans✓✓✓ Allows you to stabilize coverage for your specific
exposure while participating in the underwriting profit and investment
income.
Characteristics and issues of alternative markets Ans✓✓✓ 1. Non
standard forms used so you have to make sure coverages are included
2. What is their binding authority and process?
3. Minimum premium
4. E&O concerns -the client must understand reason for placement with
alternative markets and risk involved
5. Non contracted vs contracted market
