CAIB 4 FINAL PAPER QUESTIONS AND
SOLUTIONS
◉ 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.
Answer: 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.
Answer: Management feels firmly in control and in charge of the
decision-making.
◉ Identify a disadvantage of the top-down approach.
Answer: 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.
Answer: 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.
Answer: The employees will have fully bought-in to "their" plan.
◉ Identify a disadvantage of the bottom-up approach.
Answer: 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.
Answer: 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.
Answer: 1. Simplicity
2. Practicality
3. Severability
4. Flexibility
◉ Explain what is meant by the simplicity of a plan.
SOLUTIONS
◉ 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.
Answer: 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.
Answer: Management feels firmly in control and in charge of the
decision-making.
◉ Identify a disadvantage of the top-down approach.
Answer: 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.
Answer: 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.
Answer: The employees will have fully bought-in to "their" plan.
◉ Identify a disadvantage of the bottom-up approach.
Answer: 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.
Answer: 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.
Answer: 1. Simplicity
2. Practicality
3. Severability
4. Flexibility
◉ Explain what is meant by the simplicity of a plan.
