CAIB 4 CHAPTER 1 Questions with Correct Solutions
Question:
1. Identify any five activities, in addition to planning, that the professional insurance
brokerage will need to capitalize on in order to take advantages of these opportunities.
Answer:
1. Be innovative
2. Be price competitive
3. Attract and reward ideal employees
4. Market products to appropriate segments
5. Focus on profitability
Question:
2. The key to success and profitability for any insurance brokerage is planning. The best plans
involve a combination of top-down and bottom-up approaches. Briefly explain the top-down
approach.
Answer:
Management decides on the mission, strategies, and objectives for the brokerage and
instructs the individual business units to achieve the established objectives
Question:
3. Identify an advantage of the top-down approach.
Answer:
Management feels firmly in control and in charge of the decision-making.
Question:
4. Identify a disadvantage of the top-down approach.
Answer:
The lack of buy-in by employees, who had no part in developing the plan. It is "managements"
plan, not theirs.
Question:
5. Briefly explain the bottom-up approach.
Answer:
The management still provides the mission and broad strategies, but leaves the development
of objectives, goals and activities to the individual business units.
, Question:
6. Identify an advantage of the bottom-up approach.
Answer:
The employees will have fully bought-in to "their" plan.
Question:
7. Identify a disadvantage of the bottom-up approach.
Answer:
Management may feel that they lack control, that the planning process is out of their hands
and that the employees may not be accepting of changes made by management if the plan is
not what management expected.
Question:
8. Briefly explain why a combination of both approaches is the best approach.
Answer:
The combination of both approaches, with open communication throughout the process, is the
key to effective and successful planning. The plan should be developed as a joint effort with
both management and the business units participating, with ample dialogue between them at
all stages of the planning process.
Question:
9. Identify the four characteristics of any plan to ensure it is understood and accepted by all
concerned.
Answer:
1. Simplicity
2. Practicality
3. Severability
4. Flexibility
Question:
10. Explain what is meant by the simplicity of a plan.
Answer:
The plan must be kept simple and the outcome should be capable of being communicated in a
simple way. It should also be capable of being implemented by employees without extensive
training while they continue to do their day-to-day responsibilities.
Question:
11. Explain what is meant by the practicality of a plan.
Question:
1. Identify any five activities, in addition to planning, that the professional insurance
brokerage will need to capitalize on in order to take advantages of these opportunities.
Answer:
1. Be innovative
2. Be price competitive
3. Attract and reward ideal employees
4. Market products to appropriate segments
5. Focus on profitability
Question:
2. The key to success and profitability for any insurance brokerage is planning. The best plans
involve a combination of top-down and bottom-up approaches. Briefly explain the top-down
approach.
Answer:
Management decides on the mission, strategies, and objectives for the brokerage and
instructs the individual business units to achieve the established objectives
Question:
3. Identify an advantage of the top-down approach.
Answer:
Management feels firmly in control and in charge of the decision-making.
Question:
4. Identify a disadvantage of the top-down approach.
Answer:
The lack of buy-in by employees, who had no part in developing the plan. It is "managements"
plan, not theirs.
Question:
5. Briefly explain the bottom-up approach.
Answer:
The management still provides the mission and broad strategies, but leaves the development
of objectives, goals and activities to the individual business units.
, Question:
6. Identify an advantage of the bottom-up approach.
Answer:
The employees will have fully bought-in to "their" plan.
Question:
7. Identify a disadvantage of the bottom-up approach.
Answer:
Management may feel that they lack control, that the planning process is out of their hands
and that the employees may not be accepting of changes made by management if the plan is
not what management expected.
Question:
8. Briefly explain why a combination of both approaches is the best approach.
Answer:
The combination of both approaches, with open communication throughout the process, is the
key to effective and successful planning. The plan should be developed as a joint effort with
both management and the business units participating, with ample dialogue between them at
all stages of the planning process.
Question:
9. Identify the four characteristics of any plan to ensure it is understood and accepted by all
concerned.
Answer:
1. Simplicity
2. Practicality
3. Severability
4. Flexibility
Question:
10. Explain what is meant by the simplicity of a plan.
Answer:
The plan must be kept simple and the outcome should be capable of being communicated in a
simple way. It should also be capable of being implemented by employees without extensive
training while they continue to do their day-to-day responsibilities.
Question:
11. Explain what is meant by the practicality of a plan.
