CIC - AGENCY MANAGEMENT EXAM VERIFIED
QUESTIONS AND ANSWERS(
LATEST UPDATED VERSION)
Success - ANSWER ->-agency is profitable and follows well-executed
procedures
-owner/management team delegates some sales and service activities
Expansion - ANSWER ->-an agency grows rapidly and targets new
marketing territories
Maturity - ANSWER ->-agency is fully developed and uses sophisticated
systems
-emphasis on collaboration and building professional integrity
-CEO/management team focuses on strategic goals, planning, human
resource development, and support systems
Factors that asses an agency's financial health - ANSWER ->1.
Profitability
2. Accounts Receivable - able to collect payments in a timely manner
3. Retention Ratio
4. Average commissions - Producer compensation structure - who owns
the book of business
5. Competencies of personnel - company markets
6. Brand - positive or negative image in the community
Tools to measure agency financial health - ANSWER ->1. Budget
2. Income Statement
3. Balance Sheet
Budget allows - ANSWER ->an owner/management team to compare
monthly results to projected results
,An income statement shows - ANSWER ->an agency's revenues and
expenses over a period of time and can depict activity over a month,
quarter, or year
Four income sources for an agency are: - ANSWER ->1. Commissions
2. Fee Income
3. Interest/Investment income - interest on agency investments &
premium trust account
4. Contingency Income - Tracking profit-sharing, premium
requirements, and monitoring losses and loss reserves
Examples of Compensation Expenses - ANSWER ->1. Executive
Compensation
2. Sales salaries and commissions
3. Staff salaries
4. Employee Benefits
5. Payroll Taxes
6. Pension and Profit Sharing
Examples of Selling Expenses - ANSWER ->1. Travel and Entertainment
2. Advertising and Promotion
3. Automobile
Examples of Administrative Expenses - ANSWER ->1. Rent, Utilities,
leases, and postage
2. Accounting, legal, and other professional services
3. Automation and data processing
4. Education, licenses, and membership fees
5. Marketing/Advertising
Determining Managing Expenses requires: - ANSWER ->1. Conducting a
situational analysis
,2. Setting targets for future short and long term expenses
3. Establishing a budget
Current Assets include - ANSWER ->cash, accounts, receivables,
marketable securities, prepaid expenses within the next 12 months
Long-Term Fixed assets include - ANSWER ->tangible items such as cars,
desks, and office equipment
Current liabilities include - ANSWER ->accounts payables, accounts
current, payroll taxes, and notes payables within the next 12 months
Long-Term liabilities - ANSWER ->are payments due more than twelve
months into the future
Shareholders Equity includes - ANSWER ->original start-up capital and
earnings retained by the business
Liquidity Ratios - ANSWER ->help measure an agency's ability to pay its
obligations
Common disruptors within an agency trigger a need for change.
Disruptors include - ANSWER ->1. Mergers and Acquisitions
2. Change in personnel, ex. key personnel
3. Creation of new profit centers
4. Restructuring and/or expanding
5. Technology Changes
6. Loss of a significant account
The 4 steps in planning for change - ANSWER ->1. Planning
2. Communicate
3. Implement
4. Evaluate. Adjust. Maintain
, A SWOT analysis tool - ANSWER ->is a useful tool for evaluating an
agencies strengths, weaknesses, opportunities, and external and
internal threats
Strength - SWOT - ANSWER ->identifies what an agency does well and
use this information to facilitate improvement
Look for examples of:
1. unique resources and assets the agency currently has
2. areas in which the agency outperforms its competitors
Weakness - SWOT - ANSWER ->Identify areas in need of improvement
and necessary resources
Look for examples of:
1. Areas in which the agency lags behind its competitors
2. Opportunities the agency has missed because it didn't have the right
resources
Opportunities - SWOT - ANSWER ->Weaknesses often become
opportunities. Identify resources the agency could add and new
products and services it could offer
Look for examples of:
1. What upgrade or new technology/software could benefit the agency
2. What areas in the agency's market are experiencing growth
Threats - SWOT - ANSWER ->Identify potential negative impacts for
which the agency needs to prepare
Look for examples of:
1. Potential regulation that could affect the agency's business
QUESTIONS AND ANSWERS(
LATEST UPDATED VERSION)
Success - ANSWER ->-agency is profitable and follows well-executed
procedures
-owner/management team delegates some sales and service activities
Expansion - ANSWER ->-an agency grows rapidly and targets new
marketing territories
Maturity - ANSWER ->-agency is fully developed and uses sophisticated
systems
-emphasis on collaboration and building professional integrity
-CEO/management team focuses on strategic goals, planning, human
resource development, and support systems
Factors that asses an agency's financial health - ANSWER ->1.
Profitability
2. Accounts Receivable - able to collect payments in a timely manner
3. Retention Ratio
4. Average commissions - Producer compensation structure - who owns
the book of business
5. Competencies of personnel - company markets
6. Brand - positive or negative image in the community
Tools to measure agency financial health - ANSWER ->1. Budget
2. Income Statement
3. Balance Sheet
Budget allows - ANSWER ->an owner/management team to compare
monthly results to projected results
,An income statement shows - ANSWER ->an agency's revenues and
expenses over a period of time and can depict activity over a month,
quarter, or year
Four income sources for an agency are: - ANSWER ->1. Commissions
2. Fee Income
3. Interest/Investment income - interest on agency investments &
premium trust account
4. Contingency Income - Tracking profit-sharing, premium
requirements, and monitoring losses and loss reserves
Examples of Compensation Expenses - ANSWER ->1. Executive
Compensation
2. Sales salaries and commissions
3. Staff salaries
4. Employee Benefits
5. Payroll Taxes
6. Pension and Profit Sharing
Examples of Selling Expenses - ANSWER ->1. Travel and Entertainment
2. Advertising and Promotion
3. Automobile
Examples of Administrative Expenses - ANSWER ->1. Rent, Utilities,
leases, and postage
2. Accounting, legal, and other professional services
3. Automation and data processing
4. Education, licenses, and membership fees
5. Marketing/Advertising
Determining Managing Expenses requires: - ANSWER ->1. Conducting a
situational analysis
,2. Setting targets for future short and long term expenses
3. Establishing a budget
Current Assets include - ANSWER ->cash, accounts, receivables,
marketable securities, prepaid expenses within the next 12 months
Long-Term Fixed assets include - ANSWER ->tangible items such as cars,
desks, and office equipment
Current liabilities include - ANSWER ->accounts payables, accounts
current, payroll taxes, and notes payables within the next 12 months
Long-Term liabilities - ANSWER ->are payments due more than twelve
months into the future
Shareholders Equity includes - ANSWER ->original start-up capital and
earnings retained by the business
Liquidity Ratios - ANSWER ->help measure an agency's ability to pay its
obligations
Common disruptors within an agency trigger a need for change.
Disruptors include - ANSWER ->1. Mergers and Acquisitions
2. Change in personnel, ex. key personnel
3. Creation of new profit centers
4. Restructuring and/or expanding
5. Technology Changes
6. Loss of a significant account
The 4 steps in planning for change - ANSWER ->1. Planning
2. Communicate
3. Implement
4. Evaluate. Adjust. Maintain
, A SWOT analysis tool - ANSWER ->is a useful tool for evaluating an
agencies strengths, weaknesses, opportunities, and external and
internal threats
Strength - SWOT - ANSWER ->identifies what an agency does well and
use this information to facilitate improvement
Look for examples of:
1. unique resources and assets the agency currently has
2. areas in which the agency outperforms its competitors
Weakness - SWOT - ANSWER ->Identify areas in need of improvement
and necessary resources
Look for examples of:
1. Areas in which the agency lags behind its competitors
2. Opportunities the agency has missed because it didn't have the right
resources
Opportunities - SWOT - ANSWER ->Weaknesses often become
opportunities. Identify resources the agency could add and new
products and services it could offer
Look for examples of:
1. What upgrade or new technology/software could benefit the agency
2. What areas in the agency's market are experiencing growth
Threats - SWOT - ANSWER ->Identify potential negative impacts for
which the agency needs to prepare
Look for examples of:
1. Potential regulation that could affect the agency's business
