CIC Agency Management Final Exam (Actual Exam 2026) |
Complete Questions and Correct Answers (Detailed
Answers) | Updated Version | Brand New Version!
Factors that asses an agency's financial health - >>> CORRECT 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 - >>> CORRECT ANSWER 1. Budget
2. Income Statement
3. Balance Sheet
Budget allows - >>> CORRECT ANSWER an owner/management team to compare
monthly results to projected results
An income statement shows - >>> CORRECT 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: - >>> CORRECT 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 - >>> CORRECT ANSWER 1. Executive
Compensation
2. Sales salaries and commissions
3. Staff salaries
4. Employee Benefits
5. Payroll Taxes
Budget Considerations for growing an agency and doing a needs assessment - >>>
CORRECT ANSWER -the specific talents and skills employees require
-an awareness of gaps, deficiencies, and surpluses within and across departments
-a determination of how many employees the agency can afford to hire
-the best time for employees to join the agency
,An agency uses its value statement to accomplish several goals - >>> CORRECT
ANSWER 1. Communicate the agency's core principles to shape its direction and
organizational goals
2. Focus on aspirations and behavioral issues that matter most to the agency's
leadership
3. Define the standards of conduct and expectations for all agency members
4. Communicate these statements orally, written, and electronic form
Value statement answers the questions - >>> CORRECT ANSWER Who we are?
What we are?
How we do it?
An example of a value statement - >>> CORRECT ANSWER The smith Agency values
helping local businesses succeed
An agency's vision statement should - >>> CORRECT ANSWER 1. Communicate a
clear picture of what an agency is trying to achieve
2. Identifies characteristics that:
-reflect the long-range goals of the agency's policyholders
-project the view of what the agency aspires to be
-guide the agency's strategic development
An agency's vision statement answers - >>> CORRECT ANSWER Where do we want
to go?
An example of a vision statement - >>> CORRECT ANSWER The vision of the Smith
Agency is to be a fully employee-owned agency that is recognized as the premier
commercial lines agency in the region
An agency's mission statement should - >>> CORRECT ANSWER -provide a clear
statement of an agency's purpose and focus
-Identify characteristics that are broadly stated in terms of service, income, and profit
-establish clear growth goals serving its key stakeholders, clients, and employees
An example of a mission statement - >>> CORRECT ANSWER ABC Agency will
provide quality personal and commercial insurance products to the clients located within
our trade area to help them achieve their financial security goals
Several considerations that contribute to establishing an agency's goals - >>>
CORRECT ANSWER -Target market niches
-Agency personnel and productivity
-Market territory
, -Multiple locations
-Marketing and Sales
Long-Range Planning - >>> CORRECT ANSWER occurs over 3 to 5 years
-establishes purpose, continuity, and direction
-focuses on broad goals that will remain relevant years later
-provides a broad picture of where an agency is headed
Short-Range Planning - >>> CORRECT ANSWER Usually extends over a 12 month
period
-more specific and provides details that fit within the framework of the long-term plan
-Involves the production of detailed action plans that organize and prioritize action steps
-Communicate roles and responsibilities
-offers guidance
-provides an agency's daily/weekly/monthly action agendas
S-M-A-R-T - >>> CORRECT ANSWER Specific - Measurable - Attainable - Realistic -
Timely
An agency's 5 growth stages - >>> CORRECT ANSWER 1. Start-Up
2. Development & Growth
3. Success
4. Expansion
5. Maturity
Start-up companies - >>> CORRECT ANSWER owner or management team handles
everything
-the agency is only beginning to establish its client base, production, and service is
unstable
Development & Growth - >>> CORRECT ANSWER -an increased number of
clients/account
-make efforts to balance revenue and expenses
-owner/management team remains involved in daily operations
Success - >>> CORRECT ANSWER -agency is profitable and follows well-executed
procedures
-owner/management team delegates some sales and service activities
Expansion - >>> CORRECT ANSWER -an agency grows rapidly and targets new
marketing territories
Maturity - >>> CORRECT ANSWER -agency is fully developed and uses sophisticated
systems
Complete Questions and Correct Answers (Detailed
Answers) | Updated Version | Brand New Version!
Factors that asses an agency's financial health - >>> CORRECT 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 - >>> CORRECT ANSWER 1. Budget
2. Income Statement
3. Balance Sheet
Budget allows - >>> CORRECT ANSWER an owner/management team to compare
monthly results to projected results
An income statement shows - >>> CORRECT 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: - >>> CORRECT 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 - >>> CORRECT ANSWER 1. Executive
Compensation
2. Sales salaries and commissions
3. Staff salaries
4. Employee Benefits
5. Payroll Taxes
Budget Considerations for growing an agency and doing a needs assessment - >>>
CORRECT ANSWER -the specific talents and skills employees require
-an awareness of gaps, deficiencies, and surpluses within and across departments
-a determination of how many employees the agency can afford to hire
-the best time for employees to join the agency
,An agency uses its value statement to accomplish several goals - >>> CORRECT
ANSWER 1. Communicate the agency's core principles to shape its direction and
organizational goals
2. Focus on aspirations and behavioral issues that matter most to the agency's
leadership
3. Define the standards of conduct and expectations for all agency members
4. Communicate these statements orally, written, and electronic form
Value statement answers the questions - >>> CORRECT ANSWER Who we are?
What we are?
How we do it?
An example of a value statement - >>> CORRECT ANSWER The smith Agency values
helping local businesses succeed
An agency's vision statement should - >>> CORRECT ANSWER 1. Communicate a
clear picture of what an agency is trying to achieve
2. Identifies characteristics that:
-reflect the long-range goals of the agency's policyholders
-project the view of what the agency aspires to be
-guide the agency's strategic development
An agency's vision statement answers - >>> CORRECT ANSWER Where do we want
to go?
An example of a vision statement - >>> CORRECT ANSWER The vision of the Smith
Agency is to be a fully employee-owned agency that is recognized as the premier
commercial lines agency in the region
An agency's mission statement should - >>> CORRECT ANSWER -provide a clear
statement of an agency's purpose and focus
-Identify characteristics that are broadly stated in terms of service, income, and profit
-establish clear growth goals serving its key stakeholders, clients, and employees
An example of a mission statement - >>> CORRECT ANSWER ABC Agency will
provide quality personal and commercial insurance products to the clients located within
our trade area to help them achieve their financial security goals
Several considerations that contribute to establishing an agency's goals - >>>
CORRECT ANSWER -Target market niches
-Agency personnel and productivity
-Market territory
, -Multiple locations
-Marketing and Sales
Long-Range Planning - >>> CORRECT ANSWER occurs over 3 to 5 years
-establishes purpose, continuity, and direction
-focuses on broad goals that will remain relevant years later
-provides a broad picture of where an agency is headed
Short-Range Planning - >>> CORRECT ANSWER Usually extends over a 12 month
period
-more specific and provides details that fit within the framework of the long-term plan
-Involves the production of detailed action plans that organize and prioritize action steps
-Communicate roles and responsibilities
-offers guidance
-provides an agency's daily/weekly/monthly action agendas
S-M-A-R-T - >>> CORRECT ANSWER Specific - Measurable - Attainable - Realistic -
Timely
An agency's 5 growth stages - >>> CORRECT ANSWER 1. Start-Up
2. Development & Growth
3. Success
4. Expansion
5. Maturity
Start-up companies - >>> CORRECT ANSWER owner or management team handles
everything
-the agency is only beginning to establish its client base, production, and service is
unstable
Development & Growth - >>> CORRECT ANSWER -an increased number of
clients/account
-make efforts to balance revenue and expenses
-owner/management team remains involved in daily operations
Success - >>> CORRECT ANSWER -agency is profitable and follows well-executed
procedures
-owner/management team delegates some sales and service activities
Expansion - >>> CORRECT ANSWER -an agency grows rapidly and targets new
marketing territories
Maturity - >>> CORRECT ANSWER -agency is fully developed and uses sophisticated
systems
