Exam (elaborations)
CIC Agency Management Questions and Answers 2024
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CIC Agency Management
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CIC Agency ManagementTypes of Agencies - answer 1. Standard lines P&C
2. Personal Lines only
3. Commercial Lines only
4. Non-StandardAuto
5. Life & Health Agency
6. Combination of the above
Banks vs. Agencies - answer 1. How much will the agency culture change if your agency is acquired by a bank?
2. Banks are governed by very specific federal and state laws that require them to function in a certain manner.
3. Banks tend to be more formal (in terms of rules, dress code, etc.) than agencies.
4. When acquired, will agency management remain the same? Who will agency management report to? How much leeway will the bank's agency manager have?
Publicly Traded vs. Privately Held - answer 1. What role does Wall Street play in the agency culture? Is the focus on long term or next quarter's results? What role does stock price play?
2. Publicly traded agencies are more focused on near term objectives.
3. Publicly traded agencies are more focused on achieving a higher rate of return (20 - 25%) than on employee satisfaction.
Exclusive vs. Independent - answer 1. Ability / Inability to place business with other carriers. This is determined by the exclusive carrier and is based on a variety of factors including type of business, location, etc. Can be frustrating to staff and owners.
2. Agency owners (and employees) get frustrated when exclusive carriers shut down production (i.e. homeowners in Florida).
3. Exclusive Agents tend to be smaller and less sophisticated in terms of automation and training.
Single Location vs. Multi-locations - answer Multiple locations require additional systems and procedures to make sure all employees are treated equally fair.
2. Are employees at one location treated the same as employees in a different location?
3. Is there friendly or unfriendly competition between locations?
Large Agencies vs. Small Agencies - answer 1. The more employees you have the less crucial each employee becomes when it comes to satisfying client needs.
2. The more employees you have the more flexibility you have when it comes to vacation, holidays, etc. 3. The more employees you have the greater the chance you are required to follow certain Federal / State / Local non-discrimination laws (See HR Section.)
Sales vs. Service - answer 1. Sales focused agencies have a greater emphasis on sales and competition between employees.
2. Service focused agencies place greater emphasis on satisfying the customer and may have a tendency to over service them. Is the client profitable? (See Financial Analysis Case Study).
3. "Bucket shops" focus on as many sales as possible and as little service as possible.
Type of Entities - answer 1. Sole Proprietorship
2. Partnership
3. Limited Liability Company
4. Subchapter S Corporation
5. C Corporation
Five stages of organizational growth - answer 1. Existence - The owner is the agency and the agency struggles to remain alive. Staffing is minimal and the agency must be creative to grow. There is little or no job specialization. The owner does everything!
2. Survival - The agency is an on-going concern and is trying to make a profit by balancing revenues and expenses. The agency needs to develop specific direction and begin staff stratification if it wants to survive and thrive.
3. Success - The agency is profitable and can be:
(a) Stable - Renewals, relatives and referrals. Very service-oriented. Needs to focus on profitability / cost control since new organic growth is limited.
(b) Growth - Agency is very sales focused and is growing rapidly.
(c) Ideally the agency should be a combination of the two.
4. Take-off - During take-off:
(a) Agency is expanding rapidly and targeting
new marketing territories.
(b) Agency needs coordination, higher level of staffing, and money.
(c) Management/Owners - Delegation is no longer an option, it's a "must." Success during this stage may most depend on ability to delegate; development of an effective ownership team with one voice
5. Maturity
(a) The agency is fully developed, decentralized, and is using sophisticated systems.
(b) These are usually the large, national brokerages.
(c) Management/CEO - focus on financials, strategic goals, planning, human resource development, and support systems
Long Range Planning - answer . Timeframe - Long-Range Planning is from three to five years into the future.
2. Strategic in nature - Establishes purpose, continuity, and direction. Focuses on what the agency wants to achieve.
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