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]