CISR AGENCY OPERATIONS CORE MANUAL UPDATED
EXAM QUESTIONS AND ANSWERS GRADED A+
✔✔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.
✔✔Describe stock and mutual companies - ✔✔Stock: Are owned by stock holders and
operate with the goal to make a profit for stakeholders.
Mutual: Owned by policyholders. Profits are used to reduce policyholder premiums to at
or neat the cost of doing business.
✔✔Managing General Agency (MGA) - ✔✔may employee excess and surplus line
agents to assist in their operation. In addition, they may also have arrangements with
standard marker whole sale intermediary who represents on or more insurance
companies
✔✔Describe Reciprocals - ✔✔Groups of individuals or organizations called subscribers,
who join together in an association to insure one another. Attorney in fact acting as
manager carrying out every operations. The subscribers insure one another in an
application of "one for all and all for one". Most specialize in one line of insurance.
✔✔Describe a risk retention group - ✔✔An insurance company that each of the
policyholders is also a stock holder. The members are businesses with related or similar
activities, and the coverage provided is limited to liability insurance formed under federal
laws granted under the "federal liability risk retention act of 1986". Still state regulated.
✔✔Describe captive insurance companies - ✔✔Owned and controlled by insureds'
typically providing coverage for casualty exposures. Can be a single (parent) or group
(group captive) that are homogenous in nature but can also insure. Group captives are
formed and licensed by state domiciled in and will use insurance company as a front to
their program.
✔✔Government insurance programs and pools - ✔✔Catastrophic in nature
Flood insurance is an example
Markets sometimes created when certain state or federal laws necessitate the
availability of some insurance protection for all.
EXAM QUESTIONS AND ANSWERS GRADED A+
✔✔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.
✔✔Describe stock and mutual companies - ✔✔Stock: Are owned by stock holders and
operate with the goal to make a profit for stakeholders.
Mutual: Owned by policyholders. Profits are used to reduce policyholder premiums to at
or neat the cost of doing business.
✔✔Managing General Agency (MGA) - ✔✔may employee excess and surplus line
agents to assist in their operation. In addition, they may also have arrangements with
standard marker whole sale intermediary who represents on or more insurance
companies
✔✔Describe Reciprocals - ✔✔Groups of individuals or organizations called subscribers,
who join together in an association to insure one another. Attorney in fact acting as
manager carrying out every operations. The subscribers insure one another in an
application of "one for all and all for one". Most specialize in one line of insurance.
✔✔Describe a risk retention group - ✔✔An insurance company that each of the
policyholders is also a stock holder. The members are businesses with related or similar
activities, and the coverage provided is limited to liability insurance formed under federal
laws granted under the "federal liability risk retention act of 1986". Still state regulated.
✔✔Describe captive insurance companies - ✔✔Owned and controlled by insureds'
typically providing coverage for casualty exposures. Can be a single (parent) or group
(group captive) that are homogenous in nature but can also insure. Group captives are
formed and licensed by state domiciled in and will use insurance company as a front to
their program.
✔✔Government insurance programs and pools - ✔✔Catastrophic in nature
Flood insurance is an example
Markets sometimes created when certain state or federal laws necessitate the
availability of some insurance protection for all.
