CIC Agency Management Final Exam (Actual
Exam 2026) | Complete Questions and Correct
Answers (Detailed Answers) | Updated
Version | Brand New Version!
What are the different things an agency must consider about the number of
relationships it needs to have ---------CORRECT ANSWER-----------------1. how many
relationships with insurance companies it can afford to maintain
2. How much premium it can promise to insurance companies
3. How many different companies it needs to write all of its accounts
4. it should end business with companies it no longer uses
What are different resources that can be used to evaluate a companies financial
stability ---------CORRECT ANSWER-----------------1. Rating services
2. Reinsurance
3. Claims paying ability
4. NAIC
5. investments
6. Agency E&O coverage
What is the first thing that an insurance company wants to know about an agency
---------CORRECT ANSWER-----------------your brand and reputation
,Elements of an Agency-company contract: Commission schedule ---------CORRECT
ANSWER-----------------some insurance companies offer higher levels of
commission for higher performing agencies
Elements of an Agency-company contract: ownership of business ---------CORRECT
ANSWER-----------------Typically an agency owns the business.
in what cases does an agency not own the business ---------CORRECT ANSWER------
-----------Exclusive agencies such as allstate and state farm. an insurance company
owns that business
Elements of an Agency-company contract: contingency/ profit sharing ---------
CORRECT ANSWER-----------------compare contracts between companies
Elements of an Agency-company contract: Agency authority ---------CORRECT
ANSWER-----------------With the agency properly licensed, it can bind and execute
coverage
Elements of an Agency-company contract: contract termination terms ---------
CORRECT ANSWER-----------------The insurance company identifies the limitations
,of an agreement, meaning the kinds of actions that can lead to termination and
whether rehabilitation is an option
What type of issues can agency authority lead to ---------CORRECT ANSWER----------
-------bottleneck issues
Elements of an Agency-company contract: Agency and direct bill responsibility ----
-----CORRECT ANSWER-----------------the agency agrees to submit all applications
promptly and remit initial premium in gross
Elements of an Agency-company contract: collection of premiums ---------
CORRECT ANSWER-----------------accounts of money shall be handles in accordance
with the designated accounting method in agreement
Elements of an Agency-company contract: Notice of contract changes ---------
CORRECT ANSWER-----------------Contracts are non-assignable. If a contracting
agency is sold, the new owner must request a new contract
What are the 5 stages of Agency growth ---------CORRECT ANSWER-----------------1.
Start up
2. Development and growth
3. success
, 4. expansion
5. maturity
What are the main agency expense categories ---------CORRECT ANSWER-------------
----1. compensation expenses
2. selling expenses
3. Administrative expenses
4. management expenses
What is an agency's largest expense categories ---------CORRECT ANSWER------------
-----Compensation expenses
What are examples of compensation expenses ---------CORRECT ANSWER------------
-----1. Executive (Owner) compensation
2. Sales salaries and commissions
3. Staff salaries
4. employee benefits
5. payroll taxes
6. pension and profit sharing
What are examples of "selling expenses" ---------CORRECT ANSWER-----------------1.
travel and entertainment
Exam 2026) | Complete Questions and Correct
Answers (Detailed Answers) | Updated
Version | Brand New Version!
What are the different things an agency must consider about the number of
relationships it needs to have ---------CORRECT ANSWER-----------------1. how many
relationships with insurance companies it can afford to maintain
2. How much premium it can promise to insurance companies
3. How many different companies it needs to write all of its accounts
4. it should end business with companies it no longer uses
What are different resources that can be used to evaluate a companies financial
stability ---------CORRECT ANSWER-----------------1. Rating services
2. Reinsurance
3. Claims paying ability
4. NAIC
5. investments
6. Agency E&O coverage
What is the first thing that an insurance company wants to know about an agency
---------CORRECT ANSWER-----------------your brand and reputation
,Elements of an Agency-company contract: Commission schedule ---------CORRECT
ANSWER-----------------some insurance companies offer higher levels of
commission for higher performing agencies
Elements of an Agency-company contract: ownership of business ---------CORRECT
ANSWER-----------------Typically an agency owns the business.
in what cases does an agency not own the business ---------CORRECT ANSWER------
-----------Exclusive agencies such as allstate and state farm. an insurance company
owns that business
Elements of an Agency-company contract: contingency/ profit sharing ---------
CORRECT ANSWER-----------------compare contracts between companies
Elements of an Agency-company contract: Agency authority ---------CORRECT
ANSWER-----------------With the agency properly licensed, it can bind and execute
coverage
Elements of an Agency-company contract: contract termination terms ---------
CORRECT ANSWER-----------------The insurance company identifies the limitations
,of an agreement, meaning the kinds of actions that can lead to termination and
whether rehabilitation is an option
What type of issues can agency authority lead to ---------CORRECT ANSWER----------
-------bottleneck issues
Elements of an Agency-company contract: Agency and direct bill responsibility ----
-----CORRECT ANSWER-----------------the agency agrees to submit all applications
promptly and remit initial premium in gross
Elements of an Agency-company contract: collection of premiums ---------
CORRECT ANSWER-----------------accounts of money shall be handles in accordance
with the designated accounting method in agreement
Elements of an Agency-company contract: Notice of contract changes ---------
CORRECT ANSWER-----------------Contracts are non-assignable. If a contracting
agency is sold, the new owner must request a new contract
What are the 5 stages of Agency growth ---------CORRECT ANSWER-----------------1.
Start up
2. Development and growth
3. success
, 4. expansion
5. maturity
What are the main agency expense categories ---------CORRECT ANSWER-------------
----1. compensation expenses
2. selling expenses
3. Administrative expenses
4. management expenses
What is an agency's largest expense categories ---------CORRECT ANSWER------------
-----Compensation expenses
What are examples of compensation expenses ---------CORRECT ANSWER------------
-----1. Executive (Owner) compensation
2. Sales salaries and commissions
3. Staff salaries
4. employee benefits
5. payroll taxes
6. pension and profit sharing
What are examples of "selling expenses" ---------CORRECT ANSWER-----------------1.
travel and entertainment
