CAIB 4 Chapter 1 || error-free answers 100%.
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. correct answers 1. Be
innovative
2. Be price competitive
3. Attract and reward ideal employees
4. Market products to appropriate segments
5. Focus on profitability
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. correct answers Management decides on the mission, strategies, and objectives for the
brokerage and instructs the individual business units to achieve the established objectives
Identify an advantage of the top-down approach. correct answers Management feels firmly in
control and in charge of the decision-making.
Identify a disadvantage of the top-down approach. correct answers The lack of buy-in by
employees, who had no part in developing the plan. It is "managements" plan, not theirs.
Briefly explain the bottom-up approach. correct answers The management still provides the
mission and broad strategies, but leaves the development of objectives, goals and activities to the
individual business units.
Identify an advantage of the bottom-up approach. correct answers The employees will have fully
bought-in to "their" plan.
Identify a disadvantage of the bottom-up approach. correct answers 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.
, Briefly explain why a combination of both approaches is the best approach. correct answers 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.
Identify the four characteristics of any plan to ensure it is understood and accepted by all
concerned. correct answers 1. Simplicity
2. Practicality
3. Severability
4. Flexibility
Explain what is meant by the simplicity of a plan. correct answers 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.
Explain what is meant by the practicality of a plan. correct answers A plan must be realistic in
order for it to work. Even a well constructed plan will be doomed to failure if it is impossible to
implement.
Explain what is meant by the severability of a plan. correct answers The finished plan is the
collection of its parts. These parts must be separate and identifiable so that each business unit can
see how they apply to their specific area of responsibility to enable them to create goals and
activities to help achieve the plan.
Explain what is meant by the flexibility of a plan. correct answers A good plan must allow for
modification, as it is not realistic to assume that the environment in which the brokerage
competes will not change. changing business conditions, loss of key employees, or change to
insurance regulations can affect implementation. Planners should provide flexibility so that mid-
plan corrections can be made.
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. correct answers 1. Be
innovative
2. Be price competitive
3. Attract and reward ideal employees
4. Market products to appropriate segments
5. Focus on profitability
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. correct answers Management decides on the mission, strategies, and objectives for the
brokerage and instructs the individual business units to achieve the established objectives
Identify an advantage of the top-down approach. correct answers Management feels firmly in
control and in charge of the decision-making.
Identify a disadvantage of the top-down approach. correct answers The lack of buy-in by
employees, who had no part in developing the plan. It is "managements" plan, not theirs.
Briefly explain the bottom-up approach. correct answers The management still provides the
mission and broad strategies, but leaves the development of objectives, goals and activities to the
individual business units.
Identify an advantage of the bottom-up approach. correct answers The employees will have fully
bought-in to "their" plan.
Identify a disadvantage of the bottom-up approach. correct answers 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.
, Briefly explain why a combination of both approaches is the best approach. correct answers 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.
Identify the four characteristics of any plan to ensure it is understood and accepted by all
concerned. correct answers 1. Simplicity
2. Practicality
3. Severability
4. Flexibility
Explain what is meant by the simplicity of a plan. correct answers 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.
Explain what is meant by the practicality of a plan. correct answers A plan must be realistic in
order for it to work. Even a well constructed plan will be doomed to failure if it is impossible to
implement.
Explain what is meant by the severability of a plan. correct answers The finished plan is the
collection of its parts. These parts must be separate and identifiable so that each business unit can
see how they apply to their specific area of responsibility to enable them to create goals and
activities to help achieve the plan.
Explain what is meant by the flexibility of a plan. correct answers A good plan must allow for
modification, as it is not realistic to assume that the environment in which the brokerage
competes will not change. changing business conditions, loss of key employees, or change to
insurance regulations can affect implementation. Planners should provide flexibility so that mid-
plan corrections can be made.
