CISR: Agency Operations QUESTIONS WITH ANSWERS
RATED A+
Explain the five steps of risk management - Risk identification: identify the customers exposure
to loss
Risk analysis: determine frequency or severity of the exposure. How much could a loss actually
cost the customer
Risk control: understand what methods can be implemented to eliminate or reduce cost
associated with exposure
Risk finance: fund losses by user either internal or external dollars
Risk administration: Implement and monitor the customers risk management program
Stakeholders - People who have the potential to be affected by any action taken by an
organization. Any group or individual who is affected by the achievements of a firm's objectives
Risk Control Methods - Avoid: not always practical
Prevent: reduces frequency
Reduce: reduces severity
Segregation: includes separation or duplication
Transfer: can be physical transfer or contractual transfer
What is the difference between a broker and an agent/producer? - Brokers do not have binding
authority
How would you best describe an agency stakeholder? - The primary stakeholders are any group
or individual who is affected by the achievement of a firm's objective
Which source of revenue is typically the largest source of income for an insurance agency? -
Commission
, What does a large number of locations mean for how an agency operates? - It may mean some
features of the agency are centralized
List the four major classes of exposure to loss - Property
Human Resources
Liability
Net Income
What are the methods of identifying loss exposures? - Interview
Checklist
Physical inspection
Activity analysis
Document review
Advertising/website
Flow charts
Loss history
Financial statements
Why is insurance regulated? - To protect the consumer
Lloyd's of London - Not an insurance company, but rather a market where Lloyd's members are
grouped together to insure risks. Typically accessed through an excess broker
Guarantee Fund - The pool of funds that standard insurer's contribute to in the instance that they
or another standard carrier become insolvent
Excess and Surplus Lines - A whole sale intermediary that places business for the benefit of the
agent
Insurance Distribution Methods - Independent: Independent agents writing with various
insurance companies. Independent agency system.
Captive: Captive agents work only for one insurance company. Direct writing.
RATED A+
Explain the five steps of risk management - Risk identification: identify the customers exposure
to loss
Risk analysis: determine frequency or severity of the exposure. How much could a loss actually
cost the customer
Risk control: understand what methods can be implemented to eliminate or reduce cost
associated with exposure
Risk finance: fund losses by user either internal or external dollars
Risk administration: Implement and monitor the customers risk management program
Stakeholders - People who have the potential to be affected by any action taken by an
organization. Any group or individual who is affected by the achievements of a firm's objectives
Risk Control Methods - Avoid: not always practical
Prevent: reduces frequency
Reduce: reduces severity
Segregation: includes separation or duplication
Transfer: can be physical transfer or contractual transfer
What is the difference between a broker and an agent/producer? - Brokers do not have binding
authority
How would you best describe an agency stakeholder? - The primary stakeholders are any group
or individual who is affected by the achievement of a firm's objective
Which source of revenue is typically the largest source of income for an insurance agency? -
Commission
, What does a large number of locations mean for how an agency operates? - It may mean some
features of the agency are centralized
List the four major classes of exposure to loss - Property
Human Resources
Liability
Net Income
What are the methods of identifying loss exposures? - Interview
Checklist
Physical inspection
Activity analysis
Document review
Advertising/website
Flow charts
Loss history
Financial statements
Why is insurance regulated? - To protect the consumer
Lloyd's of London - Not an insurance company, but rather a market where Lloyd's members are
grouped together to insure risks. Typically accessed through an excess broker
Guarantee Fund - The pool of funds that standard insurer's contribute to in the instance that they
or another standard carrier become insolvent
Excess and Surplus Lines - A whole sale intermediary that places business for the benefit of the
agent
Insurance Distribution Methods - Independent: Independent agents writing with various
insurance companies. Independent agency system.
Captive: Captive agents work only for one insurance company. Direct writing.
