CAIB 4 COMPREHENSIVE TEST PAPER
WITH SOLVED QUESTIONS
◉ how do strategies, objectives and goals flow from a mission
statement
Answer: a mission statement outlines where the brokerage is
headed and what it intends to accomplish
◉ how to ensure successful implementation of a plan
Answer: controlling implementation, linking budgets to strategies,
motivating for implementation
◉ 3 elements to organizing staff effectively
Answer: creating an organizational structure, defining employee
relationships, establishing position description
◉ what is line organization
Answer: authority flows downward from most senior executive
and responsibility flows upwards to the most senior position. This
is best suited for smaller brokerage
◉ what is functional organization
Answer: this was created to overcome the key weaknesses of the
line organization which is the concentration of too many activities
in too few managers
,◉ what is line and staff organization
Answer: this form combines the strengths of both the line and the
functional forms and is the best suited to larger brokerages
◉ why is it so important to define employee relationships
Answer: to avoid confusion of the flow of authority and
responsibility
◉ what is the role of position descriptions in organizing staff
Answer: all positions should have a job description which clearly
outlines responsibility
◉ what are the legal forms of business ownership?
Answer: Sole Proprietorship, Partnership, Corporation
◉ what are the advantages of sole proprietorship?
Answer: rights to all profits and easy to start
◉ what are the disadvantages of sole proprietorship?
Answer: all liability rests on owner and expertise limited to owner
◉ what are the disadvantages of partnerships?
Answer: difficult to dissolve and potential for conflict
, ◉ what are the disadvantages of corporation?
Answer: start up fees and legal fees
◉ what are the advantages of partnerships?
Answer: broader expertise and liability shared
◉ what are the advantages of corporation?
Answer: personal assets are protected and tax advantages
◉ what is the difference between an insurance broker and an
insurance agent?
Answer: The key difference is an insurance agents work for one
company and sell insurance for one company, a broker represents
many companies and can offer a variety of options for their
clients.
◉ what are the different types of authority in a brokerage
Answer: Implied, apparent, express
◉ what is ratification?
Answer: when you write a policy in excess of authority, present to
company who agrees to binding also backdates to original
inception date
WITH SOLVED QUESTIONS
◉ how do strategies, objectives and goals flow from a mission
statement
Answer: a mission statement outlines where the brokerage is
headed and what it intends to accomplish
◉ how to ensure successful implementation of a plan
Answer: controlling implementation, linking budgets to strategies,
motivating for implementation
◉ 3 elements to organizing staff effectively
Answer: creating an organizational structure, defining employee
relationships, establishing position description
◉ what is line organization
Answer: authority flows downward from most senior executive
and responsibility flows upwards to the most senior position. This
is best suited for smaller brokerage
◉ what is functional organization
Answer: this was created to overcome the key weaknesses of the
line organization which is the concentration of too many activities
in too few managers
,◉ what is line and staff organization
Answer: this form combines the strengths of both the line and the
functional forms and is the best suited to larger brokerages
◉ why is it so important to define employee relationships
Answer: to avoid confusion of the flow of authority and
responsibility
◉ what is the role of position descriptions in organizing staff
Answer: all positions should have a job description which clearly
outlines responsibility
◉ what are the legal forms of business ownership?
Answer: Sole Proprietorship, Partnership, Corporation
◉ what are the advantages of sole proprietorship?
Answer: rights to all profits and easy to start
◉ what are the disadvantages of sole proprietorship?
Answer: all liability rests on owner and expertise limited to owner
◉ what are the disadvantages of partnerships?
Answer: difficult to dissolve and potential for conflict
, ◉ what are the disadvantages of corporation?
Answer: start up fees and legal fees
◉ what are the advantages of partnerships?
Answer: broader expertise and liability shared
◉ what are the advantages of corporation?
Answer: personal assets are protected and tax advantages
◉ what is the difference between an insurance broker and an
insurance agent?
Answer: The key difference is an insurance agents work for one
company and sell insurance for one company, a broker represents
many companies and can offer a variety of options for their
clients.
◉ what are the different types of authority in a brokerage
Answer: Implied, apparent, express
◉ what is ratification?
Answer: when you write a policy in excess of authority, present to
company who agrees to binding also backdates to original
inception date
