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CISR Agency Operations Exam (6 SETS) Questions with Answers,100% CORRECT
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CISR - Agency Operations Exam 65 Questions with Answers,100% CORRECT
CISR - Agency Operations Exam 65 Questions with Answers Professional - CORRECT ANSWER One engaged in an occupation requiring a high level of training ... [Show More] and proficiency To be recognized as knowledgeable, gain public trust, avoid government regulation, enhance credibility - CORRECT ANSWER What are the benefits of being ethical? True - CORRECT ANSWER Is this example an ethical issue? Rating a vehicle using the wrong classification No - CORRECT ANSWER Are you allowed to sign for the insured even if the insured gave permission? peer standards, Contracts (oral & written agreements), statutes - CORRECT ANSWER Legal duties are based on three criteria: Peer standards - CORRECT ANSWER This requires a person's duty be performed in a manner similar to others in the same position. They are not written. Contracts (oral and written agreements) - CORRECT ANSWER An agreement between two or more parties that creates an obligation to do or not to do a particular thing. Statutes - CORRECT ANSWER Written laws and open to little interpretation. Actual/Expressed Authority - CORRECT ANSWER Authority that is expressly given to the agency as found in the contract. Implied Authority - CORRECT ANSWER This authority the insurance company has allowed the agent to have the appearance of authority either through custom and usage or estoppel Estoppel - CORRECT ANSWER Company is stopped from denying the agent's authority when it has allowed the same activity in the past without taking any corrective action Apparent authority - CORRECT ANSWER The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created. Loyalty, good faith, reasonable care, contractual duties - CORRECT ANSWER What are the standards of care agents owe to their insurance companies? adequate coverage, proper coverage, coverage placed in best interest, prompt communication, coverage with financially sound company - CORRECT ANSWER What are the standards of care owed to the customers? Commission, fee based, profit sharing, investment income - CORRECT ANSWER Insurance agency revenue typically falls into these four categories: Comission - CORRECT ANSWER This is typically the largest source of income and is the percentage of the premium that the agency earns Fee based - CORRECT ANSWER Agencies may offer additional services for which they may be able to legally charge a fee (consulting, loss control) Contingent/Profit sharing - CORRECT ANSWER This is a bonus that insurance companies may pay to agencies to reward the agencies' growth Investment income - CORRECT ANSWER Generated from the investment of the agencies' assests Sales & service - CORRECT ANSWER Agencies divide their personnel into two major categories: Sales staff - CORRECT ANSWER Comprised of agents or brokers with the responsibility to identify prospects, make sales calls, determine prospects needs, present solutions and secure buying decision Broker - CORRECT ANSWER If the individual is placing insurance coverage with a company for which the individual does not have a contract, they are acting as a _______ Agent - CORRECT ANSWER If the individual is placing insurance coverage with a company for which the individual has a contract, they are acting as a _______ True - CORRECT ANSWER T/F. A broker does not have binding authority customer - CORRECT ANSWER Brokers act on behalf of the ______ insurance company - CORRECT ANSWER Agents act on behalf of the _____ Producer - CORRECT ANSWER What is another name for an agent/broker Horizontal structure - CORRECT ANSWER Agencies with few employees operate this way. Staff will report directly to the owner Vertical structure - CORRECT ANSWER Larger agencies operate this way. Division of job functions and responsibilities are well defined Identification, analysis, control, finance, administration - CORRECT ANSWER What are the steps of risk management? Risk Identification - CORRECT ANSWER This is the most important step in the risk management process Property, human resources, liability, net income - CORRECT ANSWER What are the four major classes of exposure to loss? List of Assets - CORRECT ANSWER A checklist best suited for property and physical assets. Activity or situation list - CORRECT ANSWER Best suited for liability and human assets Perils Analysis - CORRECT ANSWER Commonly used to identify the potential cause of loss from human, economic, and natural perils Insurance checklist - CORRECT ANSWER Used to determine the feasibility of contractual transfer Industry list - CORRECT ANSWER Checklist specific to certain operation or industry and is generally tailored to specific assets, activities, perils, and insurable exposures commonly found in that industry or operation physical inspections - CORRECT ANSWER Conducted by informal visits to critical sites. Avoid, Prevent, Reduce, Segregate, Transfer - CORRECT ANSWER What are the ways to control risk? active retention - CORRECT ANSWER When the customer knows before the loss that they are financially responsible for all or some of the loss passive retention - CORRECT ANSWER when the customer finds out after a loss that they are financially responsible for the loss Stock or mutual companies - CORRECT ANSWER Insurance companies can be formed as what two things? independent agent - CORRECT ANSWER They represent and work with various insurance companies having the ability to compare, offer and sell policies from companies they represent Captive agent - CORRECT ANSWER They work only for one insurance company and therefore are limited to only selling policies for that company direct writer sytem - CORRECT ANSWER What is another name for a captive agent? Lloyds of London - CORRECT ANSWER Market for difficult to insure risks. Not an insurer, but a society of members who are grouped together to insure risks Managing General Agent (MGA) - CORRECT ANSWER An authorized agent of the primary insurer that manages all or part of the primary insurer's insurance activities, usually in a specific geographic area. Have authority to appoint retail agents Reciprocals - CORRECT ANSWER Groups of individuals or organizations, called subscribers, who join together into an association for the purpose of insuring one another. Risk retention group - CORRECT ANSWER Insurance company that each of the policyholders is also a stockholder. The members are businesses with related or similar activities, and the coverage provided is limited to liability insurance. captive insurance company - CORRECT ANSWER Owned and controlled by their insureds and typically provide coverage for casualty exposures. Balance sheet - CORRECT ANSWER This is a snapshot of the financial condition of the individual or organization on the date it was created Assets, liabilities, equity - CORRECT ANSWER What are the three parts of a balance sheet Assets - CORRECT ANSWER This is what is owned and what has accumulated. Can include cash, accounts receivables, investments, buildings, etc. Liabilities - CORRECT ANSWER This is what is owed to others and what the cost was to accumulate the assets. Mortgages, accounts payable, debt, etc. Equity - CORRECT ANSWER This is the difference between assets and liabilities. The money left over revenues, expenses, profit or loss - CORRECT ANSWER What are the three parts of the profit and loss statement? Revenues - CORRECT ANSWER This shows various sources of income such as sales, service, consulting. Expenses - CORRECT ANSWER This shows all expenses incurred to generate income Profit or loss - CORRECT ANSWER This is the difference between income and expenses. direct bill - CORRECT ANSWER Policies that the insurance company is responsible for sending premium billings, collecting premiums, sending late notices, sending notices or cancellation. agency bill - CORRECT ANSWER Policies billed by the insurance agency. Statement billing - CORRECT ANSWER Insurance agency must reconcile to the insurance company's statement and submit the net premium even if the agency hasn't collected the money from the insured. premium financing - CORRECT ANSWER With an agency bill policy, the agency may offer payment terms to the customer certificate of insurance - CORRECT ANSWER Not a contract or legal document. It is issued to a third party for information purposes only. Evidence of property insurance - CORRECT ANSWER Once a bider or policy has been issued, there may be other parties that need to be notified. Designed by ACORD, this is the same as a certificate of insurance [Show Less]
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CISR Agency Operations Self Quiz 50 Questions with Answers,100% CORRECT
CISR Agency Operations Self Quiz 50 Questions with Answers Which one of the following best describes actual authority? - CORRECT ANSWER When the agenc... [Show More] y is expressly given authority in the agency contract Which one of the following statements best describes the standard of care an insurance agency owes an insurance company? - CORRECT ANSWER Loyalty, good faith, reasonable care and contractual duties Which one of the following is not one of the four benefits of ethical behavior? - CORRECT ANSWER thical behavior encourages governmental regulation Which one of the following best describes a contract? - CORRECT ANSWER Oral or written agreements between two parties that creates an obligation to do or not do a particular thing Which one of the following statements best describes agency stakeholders? - CORRECT ANSWER The primary stakeholders are any group or individual who is affected by the achievement of a firm's objective Which one of the following sources of revenue for insurance agencies is typically the largest source of income for the insurance agency? - CORRECT ANSWER Commission Which one of the following statements best describes how an agency operates? - CORRECT ANSWER A larger number of locations may mean that some features of the agency be centralized Which one of the following is not one of the four major classes of exposure to loss? - CORRECT ANSWER Loss of use Insurance brokers, who act on behalf of the buyer/client, differ from agents in what way? - CORRECT ANSWER Brokers do not have binding authority The best definition of active retention is: - CORRECT ANSWER The customer knows before the loss that he/she is financially responsible for all or part of the loss Which one of the following statements regarding the process of identifying loss exposures is correct? - CORRECT ANSWER A document review of the policy is not the best method because it shows the limits, but not the risks Which one of the following best describes the risk management process? - CORRECT ANSWER Risk identification, risk analysis, risk control, risk finance, risk administration The primary reason for the regulation of insurance companies is: - CORRECT ANSWER To protect insurance consumers Which one of the following statements regarding alternative markets is correct? - CORRECT ANSWER Agents do not typically have binding authority in alternative markets Which one of the following statements concerning non-admitted insurance companies is correct? - CORRECT ANSWER Non-admitted insurance companies can only be accessed by an excess/surplus lines broker The Managing General Agent (or Agency) can best be described as representing: - CORRECT ANSWER One or more insurance companies A process involving the transfer of risk from one insurer call the ceding (or primary) company, to another called the reinsure - CORRECT ANSWER Reinsurance Form of reinsurance in which a contract automatically establishes the terms for reinsuring a class or classes of business. - CORRECT ANSWER Treaty Reinsurance Form of reinsurance using offer and acceptance of individual risks in which, under a contract of reinsurance, the reinsurer retains the faculty accept or reject each risk offered by the ceding company. - CORRECT ANSWER Facultative reinsurance Which is the most important component of face-to-face communication? - CORRECT ANSWER Body Language The four primary communication skill areas are: - CORRECT ANSWER Listening, speaking, writing, and body language Face-to-face non-verbal communication with customers is improved with each of the following, except: - CORRECT ANSWER Maintaining constant direct eye contact Which one of the following does not normally apply regarding the use of social media in an insurance agency? - CORRECT ANSWER Most agencies provide their staff with a personal email address. Two-way communication is best described as: - CORRECT ANSWER Speaking and listening Which one of the following methods could reduce the likelihood of an errors and omissions claim? - CORRECT ANSWER Using standardized letters or memos Which one of the following statements does not describe a purpose of a position guide? - CORRECT ANSWER Used to determine promotions. A formal training plan for sales and service staff of an agency should include strong skill development in which of the three major areas. - CORRECT ANSWER Technical, product knowledge, agency process (The Agency Way) The purpose and benefits of an internal quality control process include all of the following except: - CORRECT ANSWER To determine peer group results. Which one of the following best describes Standards? - CORRECT ANSWER Standards are important as they define what the expected result is for the responsibilities, duties and function of a position. While commercial lines underwriting guidelines are very similar to personal lines underwriting guidelines, there are some differences. Which one of the following is one of these differences? - CORRECT ANSWER Additional services such as loss control could be the deciding factor when selecting the company to place the coverage with Commercial applications contain boxes that 'trigger' coverage. This coverage is in place: - CORRECT ANSWER Only if the box is marked For personal lines, the guidelines for effective documentation include all but the following: - CORRECT ANSWER Documentation should include helpful editorial comments regarding knowledge that you possess of the insured's lifestyle, etc. Which one of the following statements best describes new business submissions? - CORRECT ANSWER Make sure the application is completely filled out including marking boxes that "trigger" coverage Steps in new account servicing for personal lines include all but the following: - CORRECT ANSWER Sign the application for the insured in order to expedite approval Each of the following are steps in servicing personal lines accounts, except: - CORRECT ANSWER Process the endorsement immediately without verifying accuracy Which one of the following statements about the role of personal underwriting guidelines is incorrect? - CORRECT ANSWER As most underwriting guidelines are negotiable, and reinsurance is readily available, it is not necessary to strictly adhere to most of these guidelines The steps in renewal processing include all but the following: - CORRECT ANSWER Changes in competitors' activities The three options for premium payment are: - CORRECT ANSWER Direct bill, agency bill, and premium finance Select the INCORRECT statement about certificates of insurance. - CORRECT ANSWER A certificate of insurance is a temporary insurance contract Property inspections may result in mandatory or suggested recommendations. Which of the following statements best describes mandatory recommendations? - CORRECT ANSWER In many cases, mandatory recommendations must be satisfied prior to coverage being bound The components of a balance sheet are: - CORRECT ANSWER Assets, liabilities, and equity Which one of the following best describes the profit and loss statement? - CORRECT ANSWER Summarizes the financial results over a period of time The components of the profit and loss statement are: - CORRECT ANSWER Revenues, expenses, and profit or loss If a claimant, rather than the insured, reports a claim, you should: - CORRECT ANSWER Take the claimant's information, but do not confirm any of the insured's information Which of the following is not a part of the claims process? - CORRECT ANSWER The agency accepts or denies coverage The shows various sources of income such as sales, service, consulting, etc. In an insurance agency the sources of income could include commercial lines commission. personal lines commission, life and benefits commission, contingent income, fee income, etc - CORRECT ANSWER Revenues his shows all of the expenses incurred to generate the income. In an insurance agency, expenses could include compensation expenses, business development expenses, operating expenses, etc. - CORRECT ANSWER Expenses This is the difference between income and expenses. Income minus expenses equal profit or loss. When income exceeds expenses, the result is a gross profit. - CORRECT ANSWER Profit or Loss Errors and omissions (E&O) claims brought against agents by carriers (companies) can be triggered by many factors. All of the following are the most common reasons that agents are found guilty of E&O claims, except: - CORRECT ANSWER Lack of adequate staffing An E & O claim stating that the agent did not notify the company that the insured property had become vacant would allege that the agency breached which duty owed to the insurer? - CORRECT ANSWER Failure to notify carrier of material change of risk. [Show Less]
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CISR: Agency Operations Exam 100 Questions with Answers,100% CORRECT
CISR: Agency Operations Exam 100 Questions with Answers Types of Stakeholders - CORRECT ANSWER managers and employees customers insurers vendors ... [Show More] industry associations government Transfer - CORRECT ANSWER Insurance: transfer of financial consequence to an insurance company Non Insurance: when a customer transfers financial consequences to another by contract or agreement Retention - CORRECT ANSWER Active: when a customer knows before the loss that they are responsible for all or part of the loss Passive: Whoops! when a client finds out after a loss occurs that they are responsible What is NOT one of the four benefits of ethical behavior? - CORRECT ANSWER Ethical behavior encourages governmental action Describe the standard of care an insurance agency owes to an insurance company - CORRECT ANSWER loyalty good faith reasonable care contractual duty Describe actual authority - CORRECT ANSWER when the agency is expressly given the authority in the agency contract Describe a contract - CORRECT ANSWER Oral or written agreements between two parties that creates an obligation to do or not do a particular thing What are the four benefits of ethical behavior? - CORRECT ANSWER To be recognized as a knowledgeable insurance professional within the community To gain public trust and confidence To avoid government regulation To enhance credibility with customers and companies What is the risk management process? - CORRECT ANSWER Risk Identification Risk analysis Risk control Risk finance Risk administration Explain the five steps of risk management - CORRECT ANSWER Risk identification: identify the customers exposure to loss Risk analysis: determine frequency or severity of the exposure. How much could a loss actually cost the customer Risk control: understand what methods can be implemented to eliminate or reduce cost associated with exposure Risk finance: fund losses by user either internal or external dollars Risk administration: Implement and monitor the customers risk management program Stakeholders - CORRECT ANSWER 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 - CORRECT ANSWER 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? - CORRECT ANSWER Brokers do not have binding authority How would you best describe an agency stakeholder? - CORRECT ANSWER 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? - CORRECT ANSWER Commission What does a large number of locations mean for how an agency operates? - CORRECT ANSWER It may mean some features of the agency are centralized List the four major classes of exposure to loss - CORRECT ANSWER Property Human Resources Liability Net Income What are the methods of identifying loss exposures? - CORRECT ANSWER Interview Checklist Physical inspection Activity analysis Document review Advertising/website Flow charts Loss history Financial statements Why is insurance regulated? - CORRECT ANSWER To protect the consumer Lloyd's of London - CORRECT ANSWER 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 - CORRECT ANSWER 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 - CORRECT ANSWER A whole sale intermediary that places business for the benefit of the agent Insurance Distribution Methods - CORRECT ANSWER 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 - CORRECT ANSWER 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) - CORRECT ANSWER 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 - CORRECT ANSWER 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 - CORRECT ANSWER 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 - CORRECT ANSWER 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 - CORRECT ANSWER 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. FAIR plan - CORRECT ANSWER Fair access to insurance requirement Wind/hail pools NFIP Workers comp assigned risk Federal crop insurance corp Alternative Markets - CORRECT ANSWER Breakdown; Lloyd's: private underwriters Excess and Surplus Lines: Wholesale intermediaries properly licensed retail agents. MGA. Reciprocals: subscribers Risk retention group: members Captive: parent Government: FAIR plan, wind hail pools, NFIP, workers comp assigned risk, federal crop Reinsurance - CORRECT ANSWER The process of transferring risk from one insurer to another insurer. Sometimes referred to as "the insurance companies insurance company" and includes both treaty and facultative reinsurance Describe Treaty Reinsurance - CORRECT ANSWER The insurance company (ceding company) agrees to transfer (cede) certain classes of business to the reinsurance company. These classes of business are described in the treaty (agreement). The insurance company agrees to cede and the reinsurance company agrees to accept all business qualified as contained in treaty. The reinsurance company, in return, received a premium for the ceding insurance company. Describe facultative reinsurance - CORRECT ANSWER Any exposure that does not qualify for reinsurance by treaty can be offered to the underwriter on an individual basis. It is individually underwritten and individually priced. The reinsurer is not obligated to offer a quote and can decline the submission. Describe the importance of reinsurance to an agency - CORRECT ANSWER Personal Lines: Can be affected by limitations such as liability limits property limits, PC's, etc. The insurance company may be unable to provide coverage because reinsurance is not in place. Reinsurance restrictions may be the reason for the limitation of binding authority. Commercial Lines: Can be affected by both coverage limitations and pricing. If reinsurance is required on a risk that falls outside of the scope of treaty, pricing and coverage availability can be affected. underwriter must include premium charge. How are non-admitted companies accessed? - CORRECT ANSWER Can only be accessed by excess/surplus lines broker Do agents have binding authority in the alternative market? - CORRECT ANSWER Not typically. What is the best way to describe an MGA or an agent? - CORRECT ANSWER Representing one or more insurance companies Communication skills - CORRECT ANSWER Listening Speaking Writing Body Language Ways to improve non verbal communication - CORRECT ANSWER Watch your proximity to the other person; 2-4 ft Eye contact Facial Expressions Smell Ways to improve verbal communication - CORRECT ANSWER Pay attention to the volume of speech. Have a pleasant voice Avoid using industry jargon when possible Ways to improve listening skills - CORRECT ANSWER After customer speaks, summarize what has been said for clarification before answering any questions or providing recommendations Avoid thinking about what you want to say next Do not interrupt Types of communication - CORRECT ANSWER Two way communicating; listening and speaking Body Language and tone of voice One way communication Email Percentages of communication styles picked up on - CORRECT ANSWER Telephone: Actual words 14% Tone 86% Face to Face: Actual words 7%, tone 38%, body language 55% What are the steps to proofing written communication? - CORRECT ANSWER Proof the content Proof the grammar Look at the correspondence after printing and before mailing Ask yourself these questions when proofing a document - CORRECT ANSWER Is the information accurate? Is the message clear to the reader? Did I avoid using jargon/abbreviations? Is this organized and professionally written? Social media - CORRECT ANSWER Combining personal interaction with technology to create some level of value. A collection of internet based applications that permit an exchange of content *Used to communicate &, share information, directions, for advise or opinions, entertainment and to connect with others. Why do insurance companies use social media? - CORRECT ANSWER Expand customer base Provide customer service Inform clients and exchange information Increase product branding and visibility to better connect with customers Can be an excellent marketing + relationship tool Creates the ability to interact with clients, prospects, other companies, vendors, and industry associates Explain what should be contained in an employee social media policy - CORRECT ANSWER Purpose Confidentiality No expectation of privacy Authority Productivity Definitions Violations Discipline Other Components of position description - CORRECT ANSWER Reason for the position Authority granted Defined responsibilities Standards of work performed What are the benefits to written uniform systems and procedures? - CORRECT ANSWER Become the map for how things are to be accomplished and the standard or level of performance required Cornerstone for measuring effectiveness and productivity Serve as a key training tool Reinforce the quality of work while removing uncertainty of how to accomplish what needs to be done List the phases of technology utilization by an agency - CORRECT ANSWER Manual transition: the agency has minimal reliance on technology and automation Process focused: agency is beginning to utilize technology to enhance service and work more efficiently Service focused: use of technology and automation is the primary source of information and documenting Client focused: technology and automation fully implemented allowing more time to focus on the customer and achieve increased productivity A formal training plan should be... - CORRECT ANSWER Written Constructed by management and employee Relevant to the position Specific Time sensitive Achievable What is the purpose of implementing an internal quality control process - CORRECT ANSWER To determine: That work is being done according to the agency's system and procedures That the quality of the work is within the required standards The level of productivity *The benefit is the verification that agency expectations are being met A formal training plan for sales and service staff of an agency should include strong skill development in which three major areas? - CORRECT ANSWER Technical Product knowledge Agency process (the agency way) What is the best way to describe standards? - CORRECT ANSWER They define what the expected result is for the responsibilities duties and functions of a position Sources that prospects come from? - CORRECT ANSWER Product generated Referralls Associations/programs Advertising/internet What are the three components to a balance sheet? - CORRECT ANSWER Assets: what is owned and what has accumulated; cash, investments, inventory, business property, accounts receivable and buildings Liabilities: what is owed to others and what was the cost to accumulate the assets; mortgages, accounts payable, debt, etc.. Equity: difference between assets and liabilities; all assets sold-liabilities paid= equity$$ Agency workflow steps - CORRECT ANSWER New business development: Source of business and relationship Account plan established Account information and documentation Submission to market Proposal to customer Activity after the order What are the roles of a CSR? - CORRECT ANSWER Technical insurance knowledge Underwriting guidelines Effective customer service practices Good communication The use of agency automation Knowledge of agency operations Underwriting guidelines; remember the following - CORRECT ANSWER Review underwriting guidelines periodically to stay aware of any changes Know your binding authority with each company The majority of the new business submitted should meet or exceed the company's underwriting guidelines The importance of underwriting guidelines; PL - CORRECT ANSWER Factors that affect a company's underwriting guidelines and make them non-negotiable are; the rate or rules files with the insurance departments prohibit any deviation. Sometimes an accounts exposure will fall outside of a company's reinsurance program making it ineligible for coverage by that company Account servicing; New business - CORRECT ANSWER Applications Underwriting questions Clients signature Documentation Issuing binders, etc Sending app to insurance company Verifying the policy *Always collect initial premium if direct bill to insured Account servicing; Existing business - CORRECT ANSWER IE: Endorsements; With endorsements verify that the named insured is making the change, communicate, request the change/follow up with the company, and verify the change Guidelines for effective documentation - CORRECT ANSWER "To support records instruments and other evidentiary authorities" "To record, create a written record of" Use agency management system Use a free form note screen Capture documentation immediately Facts only What are some coverage differences? - CORRECT ANSWER Perils insured against Special limits of coverage Limits of liability Additional coverages Commercial lines; know your companies appetite - CORRECT ANSWER Likes to write certain business Specializes in certain business Offers additional services Processing renewal business - CORRECT ANSWER Renewal List Review list and cnontact insured to look for changes, verify and find new exposures Renewal checklist Commercial applications contain boxes that trigger coverage. This coverage is only in place if...? - CORRECT ANSWER Only if the boxes are marked A difference between personal or commercial underwriting guidelines is? - CORRECT ANSWER Additional services such as loss control could be the deciding factor when selecting the company to place coverage with Why is evaluating the financial condition of an insured an important piece in the underwriting process? - CORRECT ANSWER There is a direct correlation between the financial condition of insured's and their loss experience Increase in loss frequency and severity due tp not having funds for maintenance The profit and loss statement is also referred to as an....? - CORRECT ANSWER Income and expense statement What are the three components to a profit and loss? - CORRECT ANSWER Revenues: various sources of income such as sales, serving, consulting, etc. In an insurance agency income could include CL commission, PL commission, life + benefits commission, contingent income, fee income, etc. Expenses: all expenses incurred to generate income in an agency could include compensation expenses, business development and operation expenses etc. Profit or Loss: This is the difference between income and exposure when income exceeds expenses. The result is gross profit. income - expenses = profit or loss How many years of financial statements should be obtained for an accurate profit/loss statement? - CORRECT ANSWER 3 Years Question to ask before forwarding financial statements to an insurance company: - CORRECT ANSWER Has income been increasing or decreasing Has profit been increasing or decreasing Is the operation profitable? if not, why What is the trend of the profit or loss Does the income match the rate basis used in calculating the liability premium Direct Bill - CORRECT ANSWER Insurance company collects all besides initial down payment of premium and sends all billing notices, cancellations, etc. Company remits the agency commission monthly after collecting from policyholders. Commission adjustments made for endorsements + cancellations Net premium formula - CORRECT ANSWER gross premium - commission = net premium Agency bill - CORRECT ANSWER Billed to agency Agents submit an accounting of the policies billed showing the gross premium, commission, and net premium due to the insurance company. The report is called account current. Premiums collected are held in a fiduciary capacity. They cannot be used for any purpose except for paying company net premium on the account current statement Statement billing - CORRECT ANSWER Offered by company for agency Lists all transactions from agency bill items and calculates the net premium due from the agency for these items Agency must reconcile to the companies statement and submit the net premium due to the company even if hasn't collected from insured offered by company for agency Billing statement - CORRECT ANSWER If insured doesn't pay the premium it is the agency's responsibility to request that the company cancel for NP. Agency is still responsible for any earned premium while coverage was in force Direct bill advantages - CORRECT ANSWER Agency is not responsible for unpaid premiums Agency saves on expenses by not incurring costs to collect, deposit, and account for the premiums Disadvantage of agency bill - CORRECT ANSWER Agency is responsible for unpaid premiums as well as those they collect Expenses increase due to cost of collecting, depositing, and accounting for premiums Premium financing - CORRECT ANSWER Agency bill payment plan option Finance agreement has right to request cancellation for non payment to company Evidence of Insurance - CORRECT ANSWER Certificate of insurance: NOT a contract or legal document. Holder of certificate has no rights or privileges under the contract. Issued to third part for info only. Confirm coverage in force. Does not amend, change, or extend the policy Evidence of property insurance: same purpose as certificate of insurance unless granted under terms of contract the holder of the form is not an interests and hasn't been extended rights. Does not change, amend, or extend coverage or terms provided Binder: temporary insurance contact. Bound but not received What is the best way to describe the profit and loss statement? - CORRECT ANSWER Summarize the financial results over a period of time Best way to describe mandatory recommendations? - CORRECT ANSWER Must be satisfied, usually prior to coverage being bound If the claimant and not the insured files a claim, you should...? - CORRECT ANSWER Take the claimants information but do not confirm any of the insured's info What are the steps to the claims process? - CORRECT ANSWER Insured reports the claim Report the claim to the company Claims log Draft authority Other claims issues PINES - CORRECT ANSWER P: protect property from further damage I: inventory the damaged property N: notify the insurance company E: exhibit property to the adjuster S: submit a sworn statement Benefits to a claims log - CORRECT ANSWER Keep track of: Total claim counts Number of open claims Amount paid per claim Total claim dollars paid Time between notice + closure Identify loss trends + loss ratio issues Benefits of a service station/center - CORRECT ANSWER Remove service responsibilities from the agency staff so they can focus on sales Reduce personnel in agency Offer extended hours for the convenience of the customers Why are E&O claims brought against an agent? - CORRECT ANSWER Apparent failure to perform a legal or ethical duty Different aspects of E&O - CORRECT ANSWER Negligence Common causes of claims brought against agents by insured's Common causes of claims brought against agents by insurance companies Agency defense activities What are the four elements of negligence? - CORRECT ANSWER Duty owed to another party A breach of that duty An actual loss or injury must occur There has to be a proximate cause or cause and effect relationship between the duty and the loss or injury Common causes of claims brought against agents by insureds - CORRECT ANSWER Failure to obtain proper coverage: agent will be obligated to show that it made a good faith effort to properly place risk Failure to place coverage after agreeing to it Failure to give proper advice Failure to advise insured promptly or rejection or lack of coverage Failure to renew coverage; agency billed policy gets missed Failure to service policies Failure to place on best terms available Misrepresentation Placing business with an insolvent insurer or unauthorized insurer Modifying established service to customer Making a clerical error Common causes of claims brought against agents by insurance companies - CORRECT ANSWER Exceeding binding authority Failure to notify carrier or material change in risk Misrepresenting the risk to the carrier Delay in forwarding loss information The most common reasons that agents are found guilty of E&O include: - CORRECT ANSWER Lack of product knowledge Lack of documentation Lack of consistent procedures Agency defense activities - CORRECT ANSWER Report the claim to the E&O carrier as required by policy language. How does the E&O policy define a claim? a loss? Assign one person to act as claim coordinator The claims coordinator should collect all pertinent information to a master file Promptly have a meeting with all involved agency personnel Prepare a written narrative containing all of the facts of the claim Remind all to maintain confidentiality in and out of the office Prepare to be a good witness Do not change any operating procedures afterwards without approval of the E&O carrier Let staff know results when resolved What helped in defense What lesson of any did agency learn Do changes need to be made to procedure manual Is additional training needed for agency staff An example of a false underwriting guideline - CORRECT ANSWER The pricing consideration for placing business with the carrier should always influence underwriting guidelines What is the best way to describe agency culture? - CORRECT ANSWER Leadership created the vision and employees unite and support the vision, a plain is implemented that advances the vision [Show Less]
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CISR Agency Operations 45 Questions with Answers,100 CORRECT
CISR Agency Operations 45 Questions with Answers Agency Characteristics - CORRECT ANSWER Number of Employees, Locations, Areas of Specialization, AMS ... [Show More] used, Local, Regional, National, International Operations, Use of Service Centers. Small Agency - CORRECT ANSWER Require staff to fill multiple roles. Mid-Sized Agencies - CORRECT ANSWER Staff may be split Large agencies - CORRECT ANSWER More Specialization in single lines. single or multiple locations - CORRECT ANSWER The number of locations will affect how an agency communicates and informs. It may also mean that some functions of the agency may be centralized. Local, regional, national or international operation - CORRECT ANSWER As with the number of locations, where an agency conducts business affects how an agency communicates and informs. Understanding cultural differences and the local economy becomes a critical factor in the operations of an international agency. Areas of Specialization: - CORRECT ANSWER Specialization may require all employees to have a higher level of training and skills in the type or types of business specialized in. The agency management system may require customization to meet the unique needs of the areas specialized in. Use of service centers - CORRECT ANSWER Some agencies have transferred the servicing of accounts from their agencies to their insurance carriers by contracting with a service center or customer service unit, leaving the agencies staff available for sales. Other agencies continue to provide customer service to their customers at the agency level. Service Centers will be discussed in detail later. Agency management system used - CORRECT ANSWER Since agency management systems differ in their capabilities, the system an agency has will affect its every day operations including how it provides customer service, what type of marketing material it can generate, the reports provided, and the accounting or financial reports available. Sources of Revenue - CORRECT ANSWER Commission, Fee Based Services, Profit-Sharing, Investment Income. Commission: - CORRECT ANSWER This is typically the largest source of income and is the percentage of the premium that the agency earns from the selling and the renewing of insurance including personal lines, commercial lines, life, health and disability, and employee benefits Fee based services: - CORRECT ANSWER In addition to selling insurance coverage, agencies may offer additional services for which they may be able to legally charge a fee. Loss control, risk management and insurance consulting are examples of fee-based services. Profit-sharing: - CORRECT ANSWER This is a bonus that insurance companies may pay to agencies to reward the agencies profitability and growth. (Sometimes referred to as a contingency check.) Investment Income: - CORRECT ANSWER Income generated from the investment of the agencies' assets. An example of investment income would be interest earned on a bank account. Sales Staff - CORRECT ANSWER The sales staff is comprised of agents (referred to as producers in some jurisdictions) and/or brokers with the responsibility to identify prospects, makes sales calls, present solutions, and secure the buying decision. Broker - CORRECT ANSWER License: Must hold a broker's license issued by the department of insurance Binding Authority: Does not have binding authority Degree of Loyalty: Acts on behalf of, and hold highest degree of loyalty to the customer Responsibilities: Identical to those of an agent except a broker does not usually have binding authority Agent - CORRECT ANSWER License: In some states of jurisdictions, must hold a license issued by the department of insurance authorizing them to transact insurance Binding Authority: Has binding authority for the insurance company Degree of Loyalty: Acts on behalf of, and hold highest degree of loyalty to the insurance company Responsibilities: Identifying prospects, making sales calls, presenting solutions, securing the buying decision, collecting premium, and binding coverage Binding authority - CORRECT ANSWER means the agent can temporarily place coverage in force while waiting for the insurance company to issue the policy. Service Staff - CORRECT ANSWER The service staff is comprised of customer service representatives. Customer service representatives may also be referred to as customer service agents, account representatives, account executives or account managers. These positions are professional, not clerical positions. Customer service representatives have responsibility for the day-to-day operation of an agency and have responsibility for providing information, advice, and service to clients during and after the insurance transaction has taken place. How these duties take shape depends on the size of the agency. Cross selling - CORRECT ANSWER refers to selling new lines of business to existing customers. Account rounding - CORRECT ANSWER refers to selling new coverage to an existing customer. Transacting insurance - CORRECT ANSWER includes explaining or discussing coverage, presenting quotes, completing applications and binding coverage. Other positions - CORRECT ANSWER In addition to sales and service, positions in an agency may include administration and management as well as employees in accounting, claims, loss control or risk management departments. Standard of care an agent owes its insurance companies - CORRECT ANSWER Loyalty, Good Faith, Reasonable Care, Contractual Duties, Loyalty - CORRECT ANSWER Remaining faithful to the company/agency relationship Good Faith - CORRECT ANSWER Being honest throughout the entire insurance transaction and acting in the best interest of the insurance company. Reasonable Care - CORRECT ANSWER Using reasonable care in selecting the insureds that meet or exceed the insurance companies' underwriting requirements rather than submitting business that the agency knows does not qualify Contractual Duties - CORRECT ANSWER Staying within the authority as granted in the agency agreement. For example, staying within the insurance companies' binding authority with regard to both limits of coverage and types of coverage; or uploading policy information within the required time frame; or submitting the application, endorsement or binder within the required time frame. agency agreement (also referred to as the agency contract) - CORRECT ANSWER sets the foundation of the agency's relationship with the company. It defines duties and responsibilities of both parties as well as authorizing certain activities. What does the company expect from the agency? - CORRECT ANSWER A good working relationship between agency/company staff members. Honest submissions with full disclosure of material facts. Agency premium growth with that company and a respectable loss ratio. Discretion in asking for exceptions or accommodations. What does the agency expect from the company? - CORRECT ANSWER Stability in the marketplace - not hopping in and out of lines of business. Stability and fairness in its rate structure and underwriting decisions. Some agency support through advertising, education, or possible management assistance Explain the standard of care an agent owes its customers. - CORRECT ANSWER Adequate Coverage, Proper Coverage, Coverage placed in the best interest of the customer, Prompt Communication, Coverage Placed with a financially sound insurance company. Adequate coverage - CORRECT ANSWER Providing adequate coverage means the agency helps the customers determine the appropriate amount of property insurance to meet their needs; explaining the benefits and/or advantages of adequate amount of insurance; and identifying their exposures to loss and recommending the appropriate limits of coverage. Proper coverage - CORRECT ANSWER Before an agency can provide proper coverage for its customers, the staff must first understand the differences in coverages among the policies available from the insurance companies represented in the agency. It also requires the agency to use available tools to identify customer's exposures to loss. Finally, it means the agency staff must keep current with changes and innovations in the insurance marketplace. Coverage placed in the best interest of the customer - CORRECT ANSWER This requires the insurance agency to place coverage on the best possible terms for the customer. This doesn't mean the lowest cost; it means the best coverage for the customer based on the specific needs of that customer. Prompt communication - CORRECT ANSWER Promptly notify customers about all aspects of their insurance transaction with the agency and includes, but is not limited to, changes, exclusions, limitations, claims, cancellations, and non-renewals. Coverage placed with a financially sound insurance company - CORRECT ANSWER Taking care to place coverage with an insurance company that is financially able to pay a claim. If an agency obtains knowledge that a company is experiencing serious financial difficulty, consideration should be given to moving the insurance coverage to a financial sound insurance company. Signs of financial difficulty may include the insurance company's delay in payment of claims, a high rate of declined claims, late payment of commissions, or delay in returning of premiums. Stakeholders of Insurance Agencies - CORRECT ANSWER People who have the potential to be affected by any action taken by an organization. Any group or individual who is affected by the achievement of a firm's objectives. Stakeholders of Insurance Agencies - CORRECT ANSWER Board of directors Managers and employees Customers Insurers Vendors Industry associations Government Managers and employers - CORRECT ANSWER Managers and employers benefit by continued job security and the potential for increased wages or benefits. Customers - CORRECT ANSWER Customers benefit by having an agency that is financially stable which may result in the stability of its products and customer service. Insurers - CORRECT ANSWER Insurers benefit from successful agencies as it means a continued distribution source. Vendors - CORRECT ANSWER Vendors, such as providers of agency automation systems or comparative rating systems will benefit either by the agencies keeping their existing systems or spending available revenue to upgrade to a newer system. Industry Associations - CORRECT ANSWER Industry associations, such as agency associations and user groups benefit from agencies successes, as those agencies are more likely to continue their membership. Government - CORRECT ANSWER Government is negatively affected if an agency is having difficulty as it may result in the agency's non-compliance with insurance regulations. [Show Less]
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CISR Agency Operations Exam 82 Questions with Answers,100% CORRECT
CISR Agency Operations Exam 82 Questions with Answers Four benefits of ethical behavior -CORRECT ANSWER a. To be recognized as knowledgeable insurance p... [Show More] rofessionals within the community b. To gain public trust and confidence c. To avoid government regulation d. To enhance credibility with customers and companies Misrating & Misclassification - CORRECT ANSWER Risk misrated to write coverage - Insurer doesn't receive enough premium; Insurer not able to pay losses Common ethical issues - CORRECT ANSWER Rating a vehicle using wrong class; incorrect protection class; relying on RC endt; hiding other residents of household; hiding young drivers; underestimating rating for reduced premium; signing for insured Peer standards - CORRECT ANSWER Require duties to be performed in a manner similar to other in same position Oral and written agreements - CORRECT ANSWER Law recognizes the duties of the parties to perform and provides a remedy for non-performance Statutes - CORRECT ANSWER Every state has statutes: rebating Actual or Expressed Authority - CORRECT ANSWER Given by the insurance company (Binding authority, Underwriting approval) Implied Authority - CORRECT ANSWER Insurance company is stopped from denying the authority when it's allowed same activity in the past (allowing bad loss ratio for last 10 years) Apparent Authority - CORRECT ANSWER Believed authority. Protects insured from unauthorized acts of agent. (Ins. Co. pay claim, subrogates against agent) Standard of Care Owed to Insurers: Loyalty - CORRECT ANSWER Remaining faithful to company/agency relationship Standard of Care Owed to Insurers: Good Faith - CORRECT ANSWER Honesty throughout transaction; Acting in best interest of insurance co Standard of Care Owed to Insurers: Reasonable Care - CORRECT ANSWER Submit only business that meets or exceeds UW requirements Standard of Care Owed to Insurers: Contractual Duties - CORRECT ANSWER Identified in agency agreement; Staying w/in binding authority; following required time frame Standard of Care Owed to Customers: Adequate Coverage - CORRECT ANSWER Determine appropriate amount of coverage; Explain benefits & advantages; Identify loss exposure Standard of Care Owed to Customers: Proper Coverage - CORRECT ANSWER Understand differences among policies; Use tools to assist in identifying exposure to loss; Keep current w/ changes & innovations Standard of Care Owed to Customers: Coverage placed in best interest of customer - CORRECT ANSWER Best possible terms; Understand differences among policies; Not placing coverage bases only on highest commission Standard of Care Owed to Customers: Prompt communication - CORRECT ANSWER Notify customers about changes, exclusions, transactions, claims, cancellations, non-renewals Standard of Care Owed to Customers: Coverage placed with financially sound company - CORRECT ANSWER Coverage placed with insurer that can pay a claim; Obtain knowledge if company is experiencing financial troubles and move insured Licensing - CORRECT ANSWER Each state has established requirements Pre-Licensing - CORRECT ANSWER Specific education required before eligible to take license exam CE - CORRECT ANSWER Specific to license; Statutes (laws); Violations lead to fines, lost license, criminal charges Agency culture affected by leadership - CORRECT ANSWER 1. Vision for the agency 2. Plan of action to advance vision 3. Support from employees 4. Culture becomes well defined and self sustaining 5. Lack of leadership=less success Factors that affect how an agency distributes its product and provides customer service - CORRECT ANSWER 1. # of employees 2. Single or multiple locations 3. Local, regional, international operation 4. Areas of specialization 5. Use of service centers Agent/Producer - CORRECT ANSWER Acts on behalf of insurance company Broker - CORRECT ANSWER Acts on behalf of the customer 5-Step Risk Management Process - CORRECT ANSWER 1. Risk Identification (most important: an unknown exposure is unable to be analyzed, controlled or financed) 2. Risk Analysis 3. Risk Control 4. Risk Finance 5. Risk Administration Four major classes of exposures - CORRECT ANSWER Property Four major classes of exposures - CORRECT ANSWER Liability Four major classes of exposures - CORRECT ANSWER Loss of income/loss of use Four major classes of exposures - CORRECT ANSWER Human exposure Risk identification methods - CORRECT ANSWER Interview Risk identification methods - CORRECT ANSWER Checklist, survey, questionnaire Risk identification methods - CORRECT ANSWER Physical inspection Risk identification methods - CORRECT ANSWER Activity analysis Risk identification methods - CORRECT ANSWER Advertising/Website Risk identification methods - CORRECT ANSWER Document review Risk Control Techniques: Avoidance - CORRECT ANSWER Choose not to own certain property or engage in activity (not always practical) Risk Control Techniques: Loss prevention - CORRECT ANSWER Reduce frequency of loss occurring (alarm system, safety training) Risk Control Techniques: Loss reduction - CORRECT ANSWER Reduce severity (safety equipment, seat belt) Risk Control Techniques: Duplication/Separation - CORRECT ANSWER Reduces severity (Back up disks off site, parking fleet in separate lots) Risk Control Techniques: Combination - CORRECT ANSWER more than one technique Active retention - CORRECT ANSWER When customer knows before the loss that they are financially responsible for some or all of the loss Passive retention - CORRECT ANSWER When customer finds out after the loss that they are financially response (whoops) Stakeholders of Insurance Agency - CORRECT ANSWER a. Board of directors b. Managers and employees c. Customers d. Insurers e. Vendors f. Government g. Industry associations How Insurance Companies are Regulated - CORRECT ANSWER By states or jurisdictions where they do business Admitted Company - CORRECT ANSWER Authorized and licensed to do business in state Non-Admitted Company (Surplus Lines) - CORRECT ANSWER Not authorized or licensed to do business in state; Not protected by Guaranty Fund (paid to policyholders if company goes bankrupt) Excess and Surplus Lines Agent/Broker - CORRECT ANSWER Licensed to write through non-admitted insurer; Appointed by non-admitted insurer Financial Rating - CORRECT ANSWER Companies submit finances to insurance department to determine financial stability Treaty reinsurance - CORRECT ANSWER Ceding company agrees to cede (give) certain classes of business to the reinsurer as described in the agreement; Reinsurer agrees to accept all business qualifying under the agreement Facultative reinsurance - CORRECT ANSWER Exposure that ceding company reinsures is offered on an individual basis; Individually underwritten and priced Lloyds of London - CORRECT ANSWER market for difficult to insure, unique, or unusual risks; Grouped together into syndicates Managing General Agent (MGA) - CORRECT ANSWER Wholesale agent who represents one or more insurers Verbal communication - CORRECT ANSWER 7% of what listener hears in face-to-face is from words spoken, 55% from body language, 38% from tone of voice Telephone communication: 14% from words spoken, 86% from tone of voice Non-Verbal Communication - CORRECT ANSWER Personal space, eye contact, facial expressions, physical contact, smell 3-step process for proofing written communication - CORRECT ANSWER 1. Content 2. Grammar 3. Appearance Social Media for Insurance Companies - CORRECT ANSWER Customer service Inform Branding/visibility Social Media for Insurance Agents - CORRECT ANSWER Develop & maintain relationships Pursue sales opportunities Broadcast information Social Media for Insurance Customers - CORRECT ANSWER Gather information Share findings Access to service features Standards - CORRECT ANSWER Must inform employees what is expected in the work they perform to achieve what needs to be accomplish Benefits of writing systems and procedures - CORRECT ANSWER Uniform performance, training & reference tool, removes uncertainty, E&O loss prevention Four phases of technology: Manual transition - CORRECT ANSWER Minimal reliance on technology and automation Four phases of technology: process focused - CORRECT ANSWER beginning to utilize technology Four phases of technology: service focused - CORRECT ANSWER use of technology and automation is essential and primary source of information and documentation Four phases of technology: client focused - CORRECT ANSWER technology and automation is fully implemented Characteristics of formal training plan - CORRECT ANSWER 1. Written 2. Constructed by employee and manager 3. Relevant 4. Specific 5. Time sensitive 6. Achievable 7. Reviewed Internal quality control - CORRECT ANSWER To ensure business is being handled correctly, E&O control Underwriting guidelines - CORRECT ANSWER Indicator of the type of business the insurance company is either interested or not interested in Underwriting guidelines exceptions - CORRECT ANSWER Some situations make sense for UW to make an exception for a risk outside of guidelines, Infrequent (Book of business based on exception can lead to unprofitability) Guidelines for effective documentation - CORRECT ANSWER 1. Made in agency management system 2. More effective to us free form note screen 3. Made immediately after event 4. Consist of the facts 5. Used for E&O claims Financial statements as part of UW - CORRECT ANSWER 1. Evaluating financial condition 2. Relationship between financials and loss experience 3. Availability of automated accounting programs 4. Explain how information will be used and will be confidential Balance sheet components - CORRECT ANSWER a. Assets: What is owned b. Liabilities: What is owed c. Equity: Assets - Liabilities = Equity d. Statement of financial condition on a given date Profit and Loss - CORRECT ANSWER a. Summarizes financial results over a period of time b. Beginning, middle, and end c. Revenues - Expenses = Profit or Loss d. Analyze statements for the past 3 to 5 years to identify trends Inspections - CORRECT ANSWER Conducted to identify hazards, verify operations, establish property values, determine fire and life safety protection, etc. Inspection recommendations - CORRECT ANSWER At the insured's discretion whether to complete; Mandatory recommendations to be satisfied before coverage can be bound or within specified time period (failure to comply=cancellation or nonrenew) Claims - CORRECT ANSWER 1. Let insurance adjuster accept or deny coverage 2. Not to begin repairs until advised by adjuster Service Center - CORRECT ANSWER Removes service responsibilities, service outlined in contract, agency notification of changes, log for center for errors or problems E&O Claim - CORRECT ANSWER Negligence must be proved (importance of documentation) Four elements for negligence - CORRECT ANSWER 1. Duty owed to another party 2. Breach of duty 3. Actual loss or injury 4. Relationship between duty and loss or injury E&O claims: Against agents by Insureds - CORRECT ANSWER a. Failure to obtain proper coverage b. Failure to place coverage after agreeing to it c. Failure to give proper advice d. Failure to advise insured promptly of rejection or lack of coverage e. Failure to renew coverage f. Failure to service policies g. Failure to place on best terms available h. Misrepresentation (Telling insured policy provides coverage for earthquake when it does not) i.Placing with an insolvent insurer or unauthorized insurer j. Modifying established service to customers (Not notifying clients that their premium is late when you have always done so in the past) k. Making a clerical error E&O Claims: Against agents by insurance companies - CORRECT ANSWER a. Exceeding binding authority/underwriting authority b. Failure to notify carrier of material change in risk c. Misrepresenting the risk to the carrier d. Delay in forwarding loss information Steps to take when faced with potential E&O claim - CORRECT ANSWER 1. Prepare your defense before summons and complaint 2. Report claim to carrier 3. Assign one claims coordinator 4. Meet with all involved agency personnel 5. Prepare narrative 6. Confidentiality 7. Good witness 8. Don't change procedures w/out approval from E&O carrier 9. Share results once resolved [Show Less]
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CISR Agency Operations Exam 265 Questions with Answers,100% CORRECT
CISR Agency Operations Exam 265 Questions with Answers Professional - CORRECT ANSWER an adjective used to describe appearance, attitude, or actions A... [Show More] cting Ethically and Professionally - CORRECT ANSWER you put the needs of your clients above your own Ethics - CORRECT ANSWER a system or set of moral principles or practice a set of rules or standards based on a set of principles or values we accept as truths and that govern our behavior Factors that influence ethics - CORRECT ANSWER Friends, Society, Media, Belief Systems, Educational Institution, Legal Restraints, Family Benefits of Being Ethical - CORRECT ANSWER 1. Public Trust and Confidence Gained 2. Government regulation avoided 3. Enhanced Credibility Earned Public Trust and Confidence Gained - CORRECT ANSWER it is difficult to criticize that person's behavior or motives Government Regulation Avoided - CORRECT ANSWER acting in an ethical manner avoids this Enhanced Credibility Earned - CORRECT ANSWER it allows people to regard you and your business as a reliable and trusted resource Conducting Business in an Unethical Manner - CORRECT ANSWER always puts the customer secondary Examples of Bending the Rules in Insurance - CORRECT ANSWER Vehicle Usage Protection Class Property Values Other Residents in the Household Young drivers in the household Rate Basis, Classification, or Garaging Address Signing for an insured Contemplating the Ethical Response - CORRECT ANSWER Ask questions to clear blurey lines in situations Six Steps to Ethical Decision Making - CORRECT ANSWER 1. Define the Problem 2. Seek Out Resources 3. Brainstorm a List of Potential Solutions 4. Evaluate those Alternatives 5. Make Your Decision and Implement It 6. Evaluate the Decision Unethical Decision effects on the Agency's Profitability - CORRECT ANSWER Incorrect Rating = Unprofitable Agency Legal Duties are based on Three Criteria - CORRECT ANSWER Peer Standards Oral and Written Agreements Statues Peer Standards - CORRECT ANSWER require a person's duties be performed in a manner similar to others in the same position. Not typically written, but rather associated with generally accepted practice in a specific field Contracts (Oral and Written Agreements) - CORRECT ANSWER an agreement between two or more parties wich creates an obligation to do or to not do something Statues - CORRECT ANSWER written laws open to little interpretation Actual or Expressed Authourity - CORRECT ANSWER expressly given to the agency by the insurance company. It is granted in the agency contract (agreement). Implied Authority - CORRECT ANSWER describes a situation in which the authority of the agent is not specifically expressed or communicated, but it still is consistent with the agent fully exercising the expressed authority granted by the company Apparent Authority - CORRECT ANSWER authority the agent appears to have based on circumstances surrounding that belief. Insurance agencies can be held legally liable under apparent authority for things that are not expressed Estoppel - CORRECT ANSWER the principle which prevents a person from asserting something contrary to what is implied by a previous action or statement of that person or by a previous pertinent judicial determination. The insurance company is stopped from denying the agent's authority when it has allowed that same activity in the past without taking any corrective action No Authority - CORRECT ANSWER Agency cannot generate a quote or conduct business tin that insurance company Care owed to their Insurance Companies - CORRECT ANSWER Loyalty Good faith Reasonable Care Contractual Duties Loyalty - CORRECT ANSWER Act for the benefit of the insurance company regarding matters associated with the agency contract Good Faith - CORRECT ANSWER Being honest throughout the entire insurance transaction and acting in the best interest of the insurance company Reasonable Care - CORRECT ANSWER When one exercises care and concern for the safety of his or herself and others regarding business conducted with the insurance company Contractual duties - CORRECT ANSWER Always act within the authority granted in the company-agency agreement. It defines duties and responsibilities of both parties as well as authorizing certain activities Care owed to the Customer - CORRECT ANSWER Adequate Coverage Proper Coverage Coverage placed in the best interest of the customer Prompt communication Coverage placed with a financially sound insurance company Adequate Coverage - CORRECT ANSWER The agency helps the customer determine the appropriate amount of insurance to meet their needs Proper coverage - CORRECT ANSWER Must know the available polices, identify the best polic(ies) for the given exposures, and stay abreast of industry developments in order to provide pooper coverage for their customers Coverage plans Ed in the best interests of the customer - CORRECT ANSWER Placing the best coverage for the customer based on the specific needs of that customer Prompt Communication - CORRECT ANSWER Notify customers regarding all aspects of their insurance transactions with the agency including, but not limited to, changes, exclusions, limitations, claims, cancellations, and non-renewals Coverage placed with a Financially Sound Insurance Company - CORRECT ANSWER It is important to make sure coverage is placed with an insurance company that will be able to pay claims Insurance License - CORRECT ANSWER makes you eligible to sell and discuss insurance Continuing Education - CORRECT ANSWER Decided at state level, additional training required to maintain licences Good Ethics - CORRECT ANSWER =Good Business Why is it important to define the agency's clues, vision, and mission - CORRECT ANSWER these statements help define expectations for the agency's employees and distinguish the agency from its competition thereby setting the culture The Values Statement - CORRECT ANSWER this defines the heart of the organization: it is an expression of the core priorities and behavioral issues that matter most to the agency's management I.E. What do we stand for? The fvision Statement - CORRECT ANSWER What are the current and future goals of the agency The Mission Statement - CORRECT ANSWER action based statement declares what the agency actually does and how it intends to connect with and serve its customers, and it reveals what makes the agency unique Smart Goal Setting - CORRECT ANSWER Specific Measurable Attainable Relevant Time-based Specific Goal - CORRECT ANSWER What is the objective that needs to be accomplished Who is/are the person(s) responsible for it? What steps will be taken to achieve it Measurable - CORRECT ANSWER must be able to track progress and know when you have reached the finish line Attainable - CORRECT ANSWER realistic goals- not something that sets you up for failure Relevant - CORRECT ANSWER there should be a true benefit attached to reaching the desired objective Time Based - CORRECT ANSWER So everyone will stay the course within a designated time frame Agency's Brand - CORRECT ANSWER included determining its target market(s), positioning its products and areas of specialization, and defining its personality. It will be a summary of the agency's values, vision, and mission statemnts Agency Culutre - CORRECT ANSWER behavior and attitudes of the organization and its employees. It is a mix of leadership, values, traditions, beliefs, interactions, behaviors, and attitudes Company Culture with WFH - CORRECT ANSWER Connection, Collaboration, and communication need to be a prioirty to keep employees productive Leadership - CORRECT ANSWER should model and communicate the desired behaviors with in the agency A Lack of Leadership - CORRECT ANSWER results in staff members struggling to understand the vision and grappling with how to unite and adhere to a particular plan or direction Factors that Impact the Agency's Operations - CORRECT ANSWER The Agency Workforce Areas of Specialization/Lines of Business Number of Locations, Geographical Size of Operation, and Virtual Environment Local, Reginal, National, Or international Operations, Virtual or Hybrid Agency Organizational Structure Core Structure Agency Management Systems The Digital Agency Agency Revenue Expansion and Mergers and Acquisition The Agency Workforce - CORRECT ANSWER the number of employees and the positions they hold influences how the agency operates Areas of Specialization/Lines of Business - CORRECT ANSWER a higher level of training and skills in the type or types of business they handle may be needed Number of locations, Geographical Size of Operation, and Virtual Environment - CORRECT ANSWER will affect how the agency operates, communicates and informs their clients, employees, and other interested parties Local, Regional, National, or International Operatiosn - CORRECT ANSWER where an agency conducts business directly impacts how products are distributed and serviced. The Cultural differences, environment, local economy and legal issues are all critical factors Virtual or Hybrid - CORRECT ANSWER the agency may discover they can save money and attract more talent by setting up a partial or completely virtual work environment hiring, training, and managing can be handled remotely as long as the appropriate processes and technology are in place Organization Structure - CORRECT ANSWER will depend on and impact how resources are allocated, accountability is assigned, and responsibility is delegated. can be Horizontal or Vertical Horizontal Structure - CORRECT ANSWER Agencies with few employees have a flat structure. Staff will generally directly to the agency owner or in some cases office manager Vertical Strucutre - CORRECT ANSWER The division of job functions and responsibilities are will defined, as are the reporting relationships. Core Structure - CORRECT ANSWER it will be designed to support the accomplishment of its agency goals. Internal and External Factors may require change or modification to the structure Departmental Core Structure - CORRECT ANSWER work is handled by type or line of business, or by function Team- Oriented Core Structure - CORRECT ANSWER the sales and servicing of business is handled by a team of producers and service account managers under the direction of a team leader Agency Management System - CORRECT ANSWER a software package that supports the many functions agencies tend to have in common The digital Agency - CORRECT ANSWER leveraging more technology allows their workforce to work smarter, provide more immediate service, and support to stakeholders and reduces task time Accurate Data - CORRECT ANSWER to conduct a proper analysis, the date must be accurate with uniform entries that follow the agency's procedures for workflows and data entry Four Categories of Agency Revenue - CORRECT ANSWER Commission Fee-Based Services Contingent/Profit-Sharing Investment Income Commission - CORRECT ANSWER the largest source of income and are a percentage of the premium the agency earns from selling and renewing insurance policies including those for personal lines, commercial lines, life, health, and employee benefits Fee-based services - CORRECT ANSWER loss control, risk management, and insurance consulting are examples Contingent/Profit-Sharing - CORRECT ANSWER some insurance companies will do this with agencies to reward the agencies profitability and growth Investment Income - CORRECT ANSWER generated from the investments of their assests Expansion and Mergers and Acquisition - CORRECT ANSWER Agency growth often comes from this Two major Categories of Insurance Agency Personnel - CORRECT ANSWER Sales Service The Sales Workforce - CORRECT ANSWER Comprised of Agents and/or Brokers with the responsibility of identifying prospects, making sales calls, determining prospects' needs, presenting solutions, and securing the buying decision Producer - CORRECT ANSWER Agent The Service Workforce - CORRECT ANSWER professional - not clerical. They manage the full customer life cycle. They are responsible for the day-to-day management of the customer relationship Tasks during the Customer's Life cycle - CORRECT ANSWER Transacting Insurance Account Rounding or Cross Selling Referral Selling Position Description - CORRECT ANSWER complete understanding of what their job is, how it should be done, and how it relates to the agency's performance , They give insight into the agency, set expectations, and provide goals and metrics for the employment life cycle Components of a position description - CORRECT ANSWER 1. Position Title 2. Reason for the position 3. Level of Authority Granted 4. Responsibilities, Duties, and Functions 5. Measuring Performance 6. Qualifications 7. Working Conditions Agency Stakeholders - CORRECT ANSWER a person who has the potential to be affected by any action taken by an organization EX: Board of Directors, Employees, Vendors, Customers, Industry Associations, Insurance Companies, Government Board of Directors - CORRECT ANSWER helps to guide decision making that will lend to the agnecy's success. They benefit when there is an increase in the value of the agency's stock Employees - CORRECT ANSWER continued job security and the potential for increased wages or benefits depend upon agency success Vendors - CORRECT ANSWER depend on the agencies either keeping their existing systems or spending available revenues to upgrade to newer systems Customers - CORRECT ANSWER high performance within agency results in high quality, responsive Customer Service Industry Associations - CORRECT ANSWER more liektly to continue their memebership Insurance Companies - CORRECT ANSWER the agency will function as a continued distribution source for their products Government - CORRECT ANSWER can be affected by success or failure, particularly if it results in the agency's noncompliance with insurance regulations Insurance Regulation - CORRECT ANSWER regulated by States and/or jurisdictions in which they conduct business don to protect the consumer from unfair business practices McCarran-Ferguson Act (1945) - CORRECT ANSWER returned insurance regulation to the states. State regulation has proven time and time again that it effectively protects consumers and ensures promises made by insurers are kept Solvency regulations - CORRECT ANSWER seek to mitigate the risk of loss to businesses and individuals should an insurer become insolvent Market Regulation - CORRECT ANSWER seek to ensure fair treatment of policyholders in ensuring they are charged fair and reasonable insurance prices The Role of an Insurance Company - CORRECT ANSWER an Organization that provides financial protection and reimbursement of damages to individuals, families, and/or businesses according to the policy contract Mono-line Insurance Company - CORRECT ANSWER Deals with just one line of insurance Common Insurance Companies Departments - CORRECT ANSWER Claims, Finance, Legal, marketing, Product Development, and Underwriting Insurance Company Ownership Classifications - CORRECT ANSWER Stock Company Mutual Company Reciprocal Exchange Company Stock Company - CORRECT ANSWER owned by stockholders and operates with tthe goal of making a profit for those stock holders Mutual Company - CORRECT ANSWER owned by the policy holders and the goal is to provide insurance at or near the actual cost of doing business. Any money left over in the form of profits or surplus, the money may be returned to the policyholders as a dividend or used to reduce future premiums Reciprocal Exchange Company - CORRECT ANSWER describes groups of individuals or organizations called subscribers who join together into an association for the purpose of insuring one another and are managed by an attorney in fact Distribution Methods - CORRECT ANSWER Independent Agent Captive Agent (exclusive agents) Direct Writing System Independent Agents - CORRECT ANSWER represent and work with various insurance companies, having the ability to compare, offer, and sell policies and service from the insurance companies they represent. Captive Agent - CORRECT ANSWER Also known as exclusive agents, work for one insurance company and therefore are limited to only selling policies for that insurance company. They must sell accounts to the Insurance company if the agent decides to end the working relationship Direct Writing System - CORRECT ANSWER the consumer can ship online but does not have a local office to visit or primary contact person What does the company expect from the agency - CORRECT ANSWER a good working relationship between agency/company staff members honest submission with full disclosure of material facts Agency premium growth with that company What does the agency expect from the company - CORRECT ANSWER stability in the marketplace, not hopping in and out of lines of business stability and fairness in its rate structure and underwriting decisions some agency support through advertising, education, or possible management assistance Fair and prompt claims handling and serice What does the customer expect from the agent - CORRECT ANSWER Adequate Coverage Proper coverage Coverage placed in the best interest of the customer Prompt communication Coverage placed with a financially sound insurance company Financial rating - CORRECT ANSWER Insurance companies are required to submit financial data to their insurance department quarterly. That dat is then evaluated by analysts to determine continued financial stability. Two ways insurance agencies can monitor their companies - CORRECT ANSWER 1. Check with the appropriate state or jurisdiction's insurance department to see if they have taken any action as the result of the company's financial condition. 2. Check with rating organizations that can provide information about the financial stability of a specific company Admitted Insurance companies - CORRECT ANSWER the standard market which have been licensed by the state. Their forms rules and rates and regulated and their financial condition is monitored by the insurance departments of the states in which they are licensed or domiciled Guaranty Fund - CORRECT ANSWER protects business written and will step in to make payments on claims as necessary Non-Admitted Insurance Companies - CORRECT ANSWER used to insure difficult to place risks that admitted carriers often can not afford to cover. Often referred to as excess and surplus lines companies Excess and Surplus lines Agent/Broker - CORRECT ANSWER acts as a wholesale intermediary who places business for the benefit of the agent. When to use a Non-Admitted Market - CORRECT ANSWER Type of Risk Type of Coverage Differences between a Non-Admitted and Admitted Market - CORRECT ANSWER Binding Authority does not typically exist Minimum premiums are typically fully earned (if policy is canceled the insured does not receive a return premium) Coverage Forms are Non-Standard Minimum Premiums are Higher Audits are done for additional premium only They provide flexibility in product offerings Their financial strength should be reviewed Alternative Market Types - CORRECT ANSWER Lloyd's of London Reciprocals, risk retention groups, captives government programs/pools Lloyds of London - CORRECT ANSWER known as a market for difficult to insure risks as well as unique or unusual risk. A market where members are grouped together to insure risks. Members provide financing that back the policies Managing General Agent (MGA) - CORRECT ANSWER a wholesale intermediary that represents one or more insurance companies. it accepts business on behalf of his/her principal within mutually agreed upon guidelines Risk Retention Group - CORRECT ANSWER each of the policy holders is also a stock holder (owner) the members are businesses with related or similar activities and the coverage provided is limited to liability insurance they are regulated by each state Captive insurance companies - CORRECT ANSWER Owned and controlled by their insureds and typically provide coverage for P & C exposures. ,must be homogeneous in nature but can also insure Regional Insurance Company - CORRECT ANSWER conduct business only in states located in that specific geographic region. Can be more stable and offer competitive rates by avoiding states prone to high risk exposures National Insurance Companies - CORRECT ANSWER conduct business across the united states. They are larger and provide a great range of coverages Government Insurance Programs - CORRECT ANSWER another source of insurance coverage for difficult-to-place risks handle risks that the admitted company will not write either because it fails to meet the underwriting criteria or because the exposure to loss is catastrophic in nature EX: FAIR Plan, Wind and/or Hail Pools, National Flood Insurance Program, Work Comp Assigned Risk Plan, Federal Crop Insurance Corporation Fair Access to Insurance Requirement (FAIR) Plan - CORRECT ANSWER to make fire insurance available to those who are unable to obtain it through other markets. Written on a basic homeowners and dwelling fire policy. State Sponsored Wind and/or Hail Pools - CORRECT ANSWER available along the Atlantic and gulf coasts, provide insurance to property owners who are unable to get coverage for wind damage from hurricanes and other windstorms National Flood Insurance Program (NFIP) - CORRECT ANSWER administered by the Federal Insuance Administration under the federal emergency management Agency ( FEMA) allows customers located in an area prone to flooding can obtain the needed coverage Assigned Risk Plan - CORRECT ANSWER those unable to buy WC through other markets Not available in all states established by individual states to make sure employers can obtain worker's compensation insurance Federal Crop Insurance Corporation (FCIC) - CORRECT ANSWER improves the economic stability of agriculture through a sound system of crop insurance Reinsurance - CORRECT ANSWER a process of transferring risk from one insurer to another insurer Primary Functions of Reinsurance are to - CORRECT ANSWER increase underwriting capacity provide catastrophe protection stabilize loss experience manage financial rations Two types of reinsuarnce - CORRECT ANSWER Treaty Insurance Facultative Reinsurance Treaty Insurance - CORRECT ANSWER the insurance company (the ceding company - the primary company) agrees to transfer (cede) certain classes of business to the reinsurance company. The reinsurance company agrees to to accept all business that qualifies as contained in the agreement (treaty) Facultative Reinsurance - CORRECT ANSWER uses offer and acceptance of individual risks in which the reinsurer retains its faculty (the ability) to accept or reject each risk offered by the ceding company. Each exposures is a single transaction Risk - CORRECT ANSWER a condition of either positive or negative uncertainty arising from a given set of circumstance. Risk Management - CORRECT ANSWER the process of making and carrying out decisions that will minimize the adverse effect of risk on an organization. Five Step Risk Management Process - CORRECT ANSWER 1. Risk Identification 2. Risk Analysis 3. Risk Control 4. Risk Finance 5. Risk Administration Risk Identificaiton - CORRECT ANSWER identify all of the expousres exposure - CORRECT ANSWER a situation, practice, or condition that may lead to an insured's susceptibility to adverse financial consequences of loss Four Logical Classifications of Exposure to Loss - CORRECT ANSWER Property Human Resources Liability Net Income Property- exposure to loss - CORRECT ANSWER buildings, homes, personal property, BPP, equipment, intellectual property Human Resources - exposure to loss - CORRECT ANSWER risk of injury disability or death, financial hardships may occur and need to be considered: Loss of a key person Employee Benefits Employment Practices Liability Exposures Liability - Exposures to Loss - CORRECT ANSWER causing bodily injury or property damage to others through the insured's negligence personal injury Hold Harmless Requirements Contractual obligations Net Income - Exposures to Loss - CORRECT ANSWER exposures, perils, and/or hazards producing losses may interfere with an organization's goals and have a financial impact as a result Methods to identify exposures - CORRECT ANSWER Expert Review Checklist, Surveys, and Questionnaires Physical Inspection Loss Data Analysis Insurance Policy Review Procedures and Policies Review Flowchart Review Financial Statement analysis Compliance review Contract Review expert Review Method - CORRECT ANSWER information is gathered from experts who provide their professional opinions, recommendations, and solutions Checklists, Surveys, and Questionnaires Method - CORRECT ANSWER uses information-gathering documents to search systematically for as many loss exposures as possible Lists of Assets - CORRECT ANSWER a checklist is best suited for property and physical assets Strengths: provides a list of all resource's and capacities, stimulates staff to account for assets, and identifies assets that are often overlooked Weaknesses: does not address liability risks, must be updated regularly Activity or Situation Analysis - CORRECT ANSWER best suited for liability and human resources exposures to evaluate personnel and operations and how they function together Strengths: instilling a through process for loss prevention, evaluation equipment, personnel, and operations that function together, and identifying perils that are often overlooked Weaknesses: Include too much detail, it does not focus on the financial aspect of identification and operations and activities may vary by locale Perils Analysis - CORRECT ANSWER used to identify the potential causes of loss from human, economic, and natural perils Strength: provides a list of common or likely causes of loss, uses insurance terminology and can assist in identifying perils that occur infrequently and might otherwise be missed Weakness: new perils are created daily, old perils are forgotten or overlooked and the analysis may become obsolete Insurance Checklist - CORRECT ANSWER can be used to determine the feasibility of contractual transfer Strengths: a definitive list of available coverage and exclusions Weaknesses: geared toward exposures that are currently insured or are conventionally insurable Industry List - CORRECT ANSWER tailored to specific assets, activities, perils, and insurable exposures commonly found in that industry or operation Strengths: facilitates Comparisons with Peers Weakness: can be too focused on the industry or it can be too generic Physical Inspection Method - CORRECT ANSWER on site visit with pictures, safety checks, property survey report Loss data Analysis method - CORRECT ANSWER reviews historical losses to identify trends and patterns Insurance Policy Review Method - CORRECT ANSWER used to determine exposures and persils that are and are not covered Procedures and Policies Review Method - CORRECT ANSWER internal, external, and legal reviews to evaluate Flowchart method - CORRECT ANSWER consists of detailed diagrams of the sequence in which raw materials or good move through an organization's operations. Identifies bottlenecks and loss exposures Financial Statement Method - CORRECT ANSWER used to identify values that are subject to loss, events that could cause loss, and the fiscal impact after loss. Compliance Review Method - CORRECT ANSWER examination of whether there has been an adherence to professional standards and/ or regulations Contract reivew Method - CORRECT ANSWER reviews contracts of other than insurance policies and gives insight to the organization's obligations Risk Analysis - CORRECT ANSWER Step 2 measuring the exposure to loss evaluates the frequency and severity Risk Control - CORRECT ANSWER active measures taken by the insured to avoid, prevent, or reduce the frequency or severity of loss focus on finding and implementing solutions to prevent or reduce actual harm Five primary Risk Control Techniques - CORRECT ANSWER Avoidance Loss Prevention Loss Reduction Duplication/Separation Combination Avoidance - CORRECT ANSWER choose not to own certain property or to engage in an activity least expensive but not always practical Loss prevention - CORRECT ANSWER reduce the frequency of loss Loss reduction - CORRECT ANSWER reduce the severity of loss Duplication/Separation - CORRECT ANSWER Focus on reducing the severity of loss Combination - CORRECT ANSWER use more than one risk technique Risk Finance - CORRECT ANSWER focuses on determining how losses will be paid Retention - CORRECT ANSWER Active or Passive Active Retention - CORRECT ANSWER the customer know beofre the loss that they will be financially responsible for all or some of the loss Passive retention - CORRECT ANSWER customer finds out after the loss that they are financially responsible for the los Transfer - CORRECT ANSWER the customer passes the responsibility to pay for the loss to another entity Insurance or Non-Insurance Insurance Transfer - CORRECT ANSWER transfers the financial consequences of a loss to an insurance company Non-Insurance Transfer - CORRECT ANSWER transfers financial responsibility to another party through a contract or agreement Froms of Risk Finance - CORRECT ANSWER Retention or Transfer Risk Administration - CORRECT ANSWER Implementation and monitoring of the risk management process Standard - CORRECT ANSWER stated, acceptable level of performance in every area of the agency's operations Procedure - CORRECT ANSWER defines the task the agency must do or accomplish to achieve a stated standard. Who What and When should be identified with this Workflow - CORRECT ANSWER describes the specifc keystrokes and steps that need to be performed in order to complete a procedure Benefits of Written systems and procedures - CORRECT ANSWER work gets performed in a uniform way they can used as a training tool for new employees they can serve as arefernce tool for all employees they can reinforce the quality and efficiency of work by removing uncertainty about how to accomplish goals they can reduce or even prevent E&O losses they are key for defending E&O claims Automated Workflow - CORRECT ANSWER a series of tasks performed Automatically when a specific event occurs Four Levels of Technology Utilization - CORRECT ANSWER Manual Transition Process Focused Service Focused Client Focused Manual Transition - CORRECT ANSWER agency has minimal reliance on technology and automation Process Focused - CORRECT ANSWER beginning to utilize technology to enhance serice and allow staff to work more efficiently service focused - CORRECT ANSWER the use use of technology and automation is essential and is the primary source of information and documentation Client Focused - CORRECT ANSWER technology and automation are fully implemented allowing more time to focus on the customer and achieve increased productivity Three Major areas for Sales and Service staff that require a strong skill level and work Experience - CORRECT ANSWER Technical Product Knowledge Agency Process Technical Skills - CORRECT ANSWER a complete understanding of the insuring terms and conditions in the policies sold and serviced Product knowledge - CORRECT ANSWER applicaiton of the right policies and risk management solutions, and where to secure such products and resources Agency Process - CORRECT ANSWER the ability to perform your job as required by the agency Components of a Formal Training Plan - CORRECT ANSWER Written Constructed by the manager and the employee Relevant Specific Time Sensitive Achievable Reviewed Quality Control - CORRECT ANSWER a process through which the agency seeks to ensure its product and service quality is maintained or improved based on their standards The purpose of implementing an internal quality control process is to determine - CORRECT ANSWER the work is being done according to the agency's systems and procedures the quality of the work is within the required standards the level of productivity Interpersonal Skills - CORRECT ANSWER behaviors and tactics used to serve and interact effectively with others Includes communication regarding coverages and exclusions, problem solving, time management, negotiating, and closing the account Communicaiton - CORRECT ANSWER The activity of conveying information between two or more individuals Verbal Communication - CORRECT ANSWER speaking or writing Non-Verbal communicaiton - CORRECT ANSWER listening, visual media, or behavioral cues Benefits of Effective Communication - CORRECT ANSWER builds trust provides clear expectations improves relationships promotes team building improves productivity One Way Communication - CORRECT ANSWER linear and limited; it is information passed from the sender to the receiver without any feedback. Information will be dominated by the sender's knowledge Two Way Communicaiton - CORRECT ANSWER reciprocal as the receiver becomes a sender and the sender, in turn, becomes the receiver. The most effective way to get the message across is by using a combination of listening and speaking Four types of information exchange - CORRECT ANSWER Verbal Non-Verbal Visual Written Verbal Communictaion - CORRECT ANSWER the use of words to share information with other people. Both spoken and written forms. All about the words you choose and how they are heard and interpreted Steps to improve verbal communication - CORRECT ANSWER Speak with Clarity; be Knowledgeable and effective Speak Efficiently and be Respectfully empathetic Pay attention to the volume of your speech Use words customers can understand Non Verbal Communicaiton - CORRECT ANSWER the transmission of messages or signals through a non-verbal platform Steps to Improve Non Verbal Communication - CORRECT ANSWER Watch your Proximity to the Other Person Make Eye contact Be Aware of Facial Expressions Be Aware of Smell Visual communcaiont - CORRECT ANSWER infographics, slide presentations, screenshots, and videos Written Communication - CORRECT ANSWER think about structure, clarity, and content of your message before you send it. Whether in Email, Memo, Report, or social media Form Letters Email Texting Form letters - CORRECT ANSWER templates of various letters the agency uses on a regular basis. Standardized, will save time and reduce the likelihood of E&O Claim Email - CORRECT ANSWER no abbreviations in the text, used disclaimers Texting - CORRECT ANSWER prompt and short response that can be transfered to the file Steps to proof communication - CORRECT ANSWER 1. Proofing Content 2. Proofing Grammar 3. Review Grammar Insurance Companies and digital Media - CORRECT ANSWER used to expand the customer base, provide customer service, inform clients, exchange information, increase product branding and visibility, and better connect with customer Insurance Agencies and Digital Media - CORRECT ANSWER Help agents develop and maintain relationships as well as pursue sales opportunities beyond traditional methods Insurance Consumers and Digital Media - CORRECT ANSWER a way to gather information in selecting insurance products they may be interested in purchasing Employee Digital Media Policy - CORRECT ANSWER should include: purpose Confidentiality No Expectation of Privacy Authority Productivity Definitions Violations Definitions Discipline New Business Development Workflow - CORRECT ANSWER Identifying Prospects: Source of Business and relationships Establishing a Plan Gathering account information and Documentation Submitting to Markets Generating the Proposal Converting the prospect to a Customer Identifying Prospects: source of Business and Relationships - CORRECT ANSWER putting time builds trust and loyalty in both business and relationships Sources include: Producer Generated Referrals Associations/Programs Advertising/Internet Cross selling/Account Rounding of existing Clients Producer Generated - CORRECT ANSWER a relationship has been created with the prospect by the producer through the producer's efforts Referrals - CORRECT ANSWER existing customers or others recommend your agency to personal contacts for their insurance needs, creating an opportunity to develop a relationship Associations/Programs - CORRECT ANSWER a relationship with this generates a source of prospects. The relationship is indirect and based on being endorsed by the association or industry Advertising/Internet - CORRECT ANSWER Call-in business, no previous relationship exists with the agency Cross Selling/ Account Rounding of Existing Clients - CORRECT ANSWER it is an obligation to present solutions and options that address your customer's needs Establishing a plan - CORRECT ANSWER should include who is responsible for which action who will gather the necessary information what solutions to provide which markets are best who will complete submission as well as the proposal who will be the key contact Gathering Account Information and Documentation - CORRECT ANSWER a complete understating of a prospect's exposures and insurance needs is critical info must be current and accurate Submitting to Markets - CORRECT ANSWER the quality of your submission and the markets selected will determine the quality of the product and pricing you will have to present to the prospect Generating the proposal - CORRECT ANSWER a written proposal needs to be provided and explained to every prospect and/or customer Converting the Prospect to a customer - CORRECT ANSWER Insurance Company is notified in writing Evidence of Insurance, Invoice and Documents are generated AMS is updated Thank you/welcome notice sent Staff is informed of New Client Cross-selling potential is determined New business policy review is completed and sent to client Account Servicing Skills & Knowledge - CORRECT ANSWER Technical Insurance Knowledge Agency Standards and procedures Procedure to service account Insurance Company Underwriting requirements/guidelines and underwriter's appetite Documentation and effective Customer Service Practices Renewal Prcess Technical Kowledge - CORRECT ANSWER knows Coverage differences among the policies available before coverage can be placed on the best terms available for the customer Underwriting Guidelines - CORRECT ANSWER Know your Binding Authority with each insurance company Review underwriting guidelines periodically to stay aware of any changes New business submitted should meet or exceed the company's underwriting guidelines Know the appetite and additional services available Non-negotiable Guidelines Underwriting Exceptions Underwriting Specialties Applications - CORRECT ANSWER should always be completed thoroughly, accurately, and honestly Insurable Interest - CORRECT ANSWER when a person seeking insurance would suffer a financial loss or experience a hardship if the object to be insured was damaged or lost Lack of Market - CORRECT ANSWER once notified, contact the insured immediately keep the insured updated and do not promise the coverage will be replaced Submit the applicaiton - CORRECT ANSWER Send gathered information to Carrier and follow up Inspections and REcommendations - CORRECT ANSWER may result in either suggested or mandatory recommendations to reduce hazards Issuing Binders - CORRECT ANSWER confirmation of insurance must be promptly issued Verifying the Policy - CORRECT ANSWER insure it was issued correctly with the requested coverage forms Endosements - CORRECT ANSWER changes to the policy Renewal List - CORRECT ANSWER a complied list of upcoming accounts 90 - 120 days prior to the renewal Review the list and Contact the Insured - CORRECT ANSWER obtain updated information to make sure renewal policy will provided the needed protection Complete Renewal Submission - CORRECT ANSWER applications, loss runs, exmods, updates Balance Sheets - CORRECT ANSWER a snapshot of the financial condition of the individual or organization on the date the sheet was created Includes: Assets Liabilities Equity Assets - CORRECT ANSWER what is owned and what has accumulated, Cash, Accounts receivables, Investmetns, Buildings, Buisness Property, Invetory ect Liabilities - CORRECT ANSWER what is owed to others and the cost of accumulated assets. Mortgages, accounts payable, debt Equity - CORRECT ANSWER difference between Assets and Liabilities Income and Expense Statement (Profit and Loss Statement) - CORRECT ANSWER summarizes the financial results over a period of time Revenues Expenses Profit or Loss Revenues - CORRECT ANSWER sources of income such as sales, service, consulting Expenses - CORRECT ANSWER all cost incurred to generate incompe Profit or Loss - CORRECT ANSWER the difference between Income and Expenses Direct Billed policies - CORRECT ANSWER the insurance company is responsible for communicating directly with customer about all premium correspondence Agency Billed - CORRECT ANSWER billed by the agency. Responsible for collecting the premium for new business, renewals, and endorsements and then submitting the net premium to the insurance company Account Current State - CORRECT ANSWER agency submits to company showing the policies billed, gross premium, commission, and net premium due Premium Finance - CORRECT ANSWER a finance agreement is sent to the finance company along with Down payment the insured then makes scheduled payments to the finance company Statement Billing - CORRECT ANSWER Company will send to agency for collection of premium Certificate of Insurance - CORRECT ANSWER issued for information only and it does not amend, extend or change policy Evidence of Property - CORRECT ANSWER similar to COI, mainly uesed for Loss Paybles Insurance Binder - CORRECT ANSWER a temporary insurance contract when coverage has been bound but the policy has not been received Claims Processing - CORRECT ANSWER insured reports a claim take claim information informing insured of policy conditions reporting claim to the insurance company logging the claim PINES - CORRECT ANSWER what the insured must do Protect the property from further damage Inventory the Damaged Property Notify the Insurance Company Exhibit the property to the Adjsuter Submit a sworn statement Reservation of Rights letter - CORRECT ANSWER an insurance company agrees to investigate a claim or suit and defend the insured while retaining the right to deny coverage at a later time Suit and Summons - CORRECT ANSWER notice that a lawsuit is being filed against the insured Service Centers - CORRECT ANSWER assist agency's workforce and the ability to refocus their time Negligence - CORRECT ANSWER must be prone, failure to perform a duty, failure to use a degree of care that is generally considered reasonable under a given set of Circumstances Four elements for Negligence to have occured - CORRECT ANSWER 1. there must be a duty owed to another party 2. There must be a breach of that Duty 3. There are Damages - an actual loss or injury must occur 4. There has to be a proximate cause or cause -and- effect relationship between the duty and the loss or injury Common Claims brought against Agents by Insureds - CORRECT ANSWER Failure to Obtain Proper Coverage Failure to place coverage after binding it Failure to give proper advice Failure to promptly advise insured of rejection or lack of Coverage Failure to maintain or renew coverage Failure to service Policies Failure to place coverage on best terms and conditions available Misrepresentation of Facts Placing coverage with an insolvent insurer or unauthorized insurer Modifying established service to customers Making a Clerical Error Common causes of Claims brought against Agents by Insurance Companies - CORRECT ANSWER Exceeding Binding Authority Failure to properly Process a claim Failure to notify carrier of Material Change in Risk Misrepresenting the risk to the carrier Agency Defense Activites - CORRECT ANSWER 1. Agency reports claim to their E&O Carrier 2. Agency assigns one person to act as the coordinator 3. Promptly have a meeting with all agency personnel involved in E&O Claim 4. Prepare to be a good witness 5. Do not change any operating procedures 6. Inform the agency of the outcome [Show Less]
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