CIC AGENCY MANAGEMENT EXAM 2024 ACTUAL
EXAM COMPLETE 250 QUESTIONS WITH
DETAILED VERIFIED ANSWERS//ALREADY
GRADED A+
Organizational Structures Available to Insurance Agencies - ANSWERSales Oriented vs
Service oriented
Large Agencies vs Small Agencies
Publicly Traded Vs Privately Held
Impact of Federal & State Regulations on Agencies - ANSWERWhy do we have
regulations?
-To make sure we keep promises
-Interstate Commerce
-Consumer Protection
-Viable Insurance Marketplace
Characteristics of the 5 stages of Agency Growth - ANSWER(ESSTM)
1. Existence - agency struggle, must be creative to move, basic staff, owner does
everything
2. Survival - Ongoing concern, must have direction to grow, owner heavily involved,
balance revenues & expenses.
3. Success - Profitable, can stay or grow, must be sales oriented to grow, owner not as
involved.
4. Take-Off - Expands quickly, coordination to grow, increase staff, $=People,
Delegation no longer and option
5. Maturity - Developed, tends to be large, focus on $ & planning
Types of Company Markets available to agents - ANSWERStandard Markets
-Stock - Owned by Stockholders
-Mutual - Owned by policyholders
-Direct writers - exclusive
Alternative Markets
-Excess Surplus
- MGA's
- Brokerage
,- SIFs
Company - Agency Agreement - ANSWERCommissions, Ownership, Contingency,
Agency Authority, Agency or Direct Bill.
How many companies? Few vs Many?
Volume & Volume requirements, Financial Stability, personnel, support, claims pay
Company expectations of an agency - ANSWERTrack record of business & sales
success management, growth plan, sales culture, assertive, successful, marketing
focus & plan, staff, low loss ratio, high close ration.
Factors that positively/negatively impact agency value - ANSWERProfitability, retention
ration, commissions, producer compensation, personnel quality, Markets, E&O etc.
Income Statement - ANSWER*Shows the revenues & expenses of the agency over
time.
Components - Commissions, fee income, other income, compensation expenses,
selling expenses & managing expenses
SPREAD - ANSWER*The difference between revenues per employee & compensation
per employee.
Larger spread = Higher Productivity
(Revenues per employee) - (Compensation per employee) = Spread
Spread - What is left to pay expenses
Balance Sheet - ANSWER*Shows what the agency owes & owns
Assets = Liability + Owner's Equity
Assets - What agency owns, what is owed to agency by others.
-Current - Cash, A/R any assets converted to cash in 12 months
-Fixed - Long term, cars, office equip
Liabilities - What agency owes to others
-Current - A/P, Payroll taxes, W/I 12 months
Concept & Purpose of Liquidity Ratios - ANSWER*Help measure agency to pay
obligations.
Pay to carrier + Trust (Cash + Premium Received)
____________________________________________________________________
, Company payables (premiums payable + prebilled payables)
Less than 1 means out of trust
Current Ratio - ANSWERcurrent assets/current liabilities
Less than 1 = serious cash flow
Cash flow with in the agency - ANSWEROperating Account
Premium Trust Account
Operating Account - ANSWERDay to day operations
-Cash comes in from commissions earned from trust account, cash goes out to pay
daily expenses
Premium Trust Account - ANSWERCash comes in from account receivable, cash goes
out to pay carrier & to pay operating account for commissions
Revenue Growth - ANSWEREstablish Financial Goals - profit growth revenue growth (
situational analysis, current production, resources, expense of personnel)
Plan for Revenue Growth:
Goals - New Accounts, other sources (fees for services)
Sales Culture
Analyze Income Streams
Benefits of an agency plan - ANSWERBenefit - Operating efficiently, agency value,
communications, road map, focus on goals
Failure - Lack of commitment, communication info, goals
Value Statement - ANSWERCommunicate core principles of the agency that will shape
its direction & organizational goals
Characteristics - focus on behavioral issues, reflects standards of conduct & exception
for agency members
Vision Statement - ANSWERCommunicate to all team members what the agency is
trying to achieve
*Should Show long range goals of the team members, how you see your agency in the
future
Mission Statement - ANSWERProvides a clear statement of purpose & focus for the
agency
