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Flashcards in Chapter 9 Insurers and Insurance Representatives Deck (21)
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1

What are key indicators of an insurance agent's appropriateness for your company?

The prospective agent or broker should recommend a particular risk management and insurance program only after taking the following steps:

-agent should conduct thorough review of your business operations too determine what you actually require

-the agent should obtain from you all of the information necessary to prepare accurate and comprehensive applications for submission to various insurance markets

-consider giving a prospective agent or broker a copy of your current insurance policies and outline of the services provided

2

In choosing an insurance agent, it is best to seek:

a. a larger company that offers a wide range of policy options.
b. a company that generally handles accounts whose size and scope are comparable to yours.
c. only companies that receive an A+ rating in Best's Guide.
d. an insurance firm in your community to guarantee response and greater personal service.

b. a company that generally handles accounts whose size and scope are comparable to yours.

3

Which of the following is NOT a cost associated with hiring a consultant to manage the insurance process?

a. consultant fee
b. cost of time to find the consultant
c. cost of time to vet the consultant
d. cost of not knowing which insurance markets are appropriate for you

d. cost of not knowing which insurance markets are appropriate for you

4

What is the best method for a large company with complex insurance needs?

Hiring an outside risk management and insurance consultant to supervise the entire selection process.

5

California Associates is seeking a new insurance company for its expanding needs. As a fairly large firm with complex insurance needs, it wishes to have an objective individual assess those needs and exposures and choose and agent. The best assessment method would be to:

a. hire a consultant.
b. hold and underwriting competition.
c. establish uniform specifications.
d. hold a conceptual competition.

a. hire a consultant.

6

A prospective agent or broker mat review your business operations, obtain information from you, and view your old policies before:

a. beginning a professional relationship.
b. recommending a specific risk management insurance program.
c. contacting you as a potential client.
d. having any meetings.

b. recommending a specific risk management insurance program.

7

What is the role of the insurance agency in the direct writing method of insurance marketing?

In the direct writing method the insurance company employs salespersons to make direct personal contact with prospective policyholders, usually giving them the authority to bind coverage within prescribed limits.

8

What are the three most commonly used methods for deciding an appropriate insurance agent or broker?

-comparing services capability proposals

- comparing competitive quotes

-hiring a consultant to manage the process for you

9

What is the key differentiating attribute of mutual insurers when compared to stock insurers?

a. they are owned by their policy holders
b. they are owned by foreign investors
c. they are owned by their stockholders
d. they are insured by the federal government

a. they are owned by their policy holders

10

In soliciting quotes from multiple agents or brokers, you should:

a. provide information about the fees you are now paying.
b. only ask for quotes from agencies that have previously insured your company.
c. only reach out to agents in certain markets.
d. provide consistent specifications.

d. provide consistent specifications.

11

What are the five factors to consider when assessing a potential insurer?

-financial strength
-reputation and market presence in your field
-ability to handle claims, loss control, and other services
-stability and long-term market history for your type of business
-cost

12

Which of the following is NOT a relevant criterion to use when assessing potential insurers?

a. reputation in your field
b. financial strength
c. stability of your type of business
d. your company's claims history

d. your company's claims history

13

When deciding on an insurer, what is a good indication that a firm may be appropriate?

How well the firm responds to the particular requirements of your business

14

In what areas may the government compete with private insurers?

-In areas where the scope is so broad and the risk is so great that only government insurers are willing to do the job.

-times when coverage is needed for the public good (such as worker's compensation insurance)

15

What are you engaged in when comparing insurance capability proposals?

a. an examination of which agent or broker can provide the least costly quotes for the widest range of insurance coverages
b. a study and comparison of which agent or broker makes the best proposal based on your current insurance program
c. a conceptual competition that compares each agent's analysis of your loss exposure, risk management, and insurance needs, as well as their conceptual proposals
d. a review of the range of services each agent or broker possesses

c. a conceptual competition that compares each agent's analysis of your loss exposure, risk management, and insurance needs, as well as their conceptual proposals

16

What is one indiction of a good insurance agent?

How long the firm has represented its insurers and what its premium volume is with each of those insurers.

17

Veiled Properties selected an insurer that operates out of its home state of New York too be its provider. According to classifications of private insurers, this would define the insurer of Veiled Properties as a _________ insurer.

a. domiciled
b. domestic
c. continental
d. bureau

b. domestic

18

What should specifications include?

-the exact coverages to be quoted, along with the premium basis to be used for quotation

-ratings of each insurer of at least A from Best's Guide

-payment plans from each insurer that show details such as whether a finance charge is involved

-details of all services to be provided and an itemization of the special abilities of the competitor

-data about payrolls, sales, vehicles, loss runs, and property lists and values

19

Brash Inc.'s primary business focuses on demolition work. As a company with a "hard to place risk," most likely they would pursue an insurance company that markets itself as a(n):

a. large mutual insurance company
b. independent agency
c. insurance broker
d. excess and surplus insurance broker

d. excess and surplus insurance broker

20

The financial strength of an insurance company can be indicted by its:

a. rating in Best's Guide
b. large number of agents
c. large market share
d.long-term commitment

a. rating in Best's Guide

21

Where can you find the financial strength of an insurance company?

Best's Guide rates insurers on 8 key criteria
-profitability
-leverage
-liquidity
-spread of risk
-reinsurance
-assets
-reserves
-management