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CISR AGENCY OPERATIONS EXAM 2025 | ALL
QUESTIONS AND CORRECT ANSWERS |
GRADED A+ | LATEST EXAM | VERIFIED
ANSWERS | JUST RELEASED
Which core structure is typically handled by the sales and servicing of business through producers and service account managers? --------- CORRECT ANSWER-----------------Team (think PL team with Beth as manager, or DII 2.0) What are the 4 types Agency Revenue? ---------CORRECT ANSWER-------- ---------- Commission (LARGEST source of income)
- Fee-based services (loss-control, risk management)
- Contingent/Profit-sharing (agency may receive as bonus)
- Investment income (agencies may receive income generated from investment of their assets (example: interest earned on bank account) How does Expansion and Mergers and Acquisition help an agency grow? -- -------CORRECT ANSWER-----------------It is a way for the agency to expand its customer base—by either buying a book of business or an entire agency/group, or joining a consortium group to gain workforce, additional markets, and diversify books of business (example: Safeco bought by Liberty Mutual) What are duties of the sales workforce (producer)? (5) ---------CORRECT ANSWER-----------------Identifying prospect Sales call Determining property needs Presenting solutions Securing buying decision
What are the duties of the service workforce (CRMs) (3) ---------CORRECT ANSWER------------------ Transacting insurance: discuss coverage, present quotes, apps & binding
- Account rounding or cross-selling: combining home & auto
- Referral Selling: selling new lines to other who have a business/personal relationship with existing customer What are the purposes of a position description? (4) ---------CORRECT ANSWER------------------ Defines acceptable performance
- Describes what duties are to be performed
- Helps with performance evaluations across department
- Support & justify pay What are the components of a position description? (7) ---------CORRECT ANSWER-----------------Position title Reason for position Level of authority granted Responsibilities, duties, functions (p. 66) Measuring performance Qualifications Working conditions Examples of stakeholders in an insurance agency (7) ---------CORRECT ANSWER-----------------Board of Directors Employees Vendors Customers Industry Associations Insurance Companies Government
What does an insurance company expect from the agency? (3) --------- CORRECT ANSWER------------------ A good working relationship between agency/company staff members (competent managers & knowledgeable/professional staff)
- Honest submission with full disclosure of material facts (High close ratio on new business and high retention ratio)
- Agency premium growth with that company (Low loss ratio) What does the agency expect from the insurance company? (4) --------- 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 service 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 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. What are the 3 definitions of Ethics? ---------CORRECT ANSWER------------- ----1) The rules of conduct governing a particular class of human actions or a particular group, culture, etc. (Webster's College Dictionary)
- a discipline dealing with good and evil and moral duty
- Right vs. right (both possibilities have value and merit, yet one must be selected over the other) What are 3 benefits of ethical behavior? ---------CORRECT ANSWER-------- ---------1) Public trust & confidence gained
- Government regulation avoided
- Enhanced credibility gained Why would an agent want to gain public trust & confidence --> establishing a reputation for being trustworthy? ---------CORRECT ANSWER----------------
- This provides both the agent and agency the opportunity to be recognized as knowledgeable and sound. This helps with sales and overall financial status
- Make your decision and implement it
- Evaluate the decision Legal duties are based on what 3 criteria? ---------CORRECT ANSWER----- ------------- Peer standards
- Oral and written agreements (contracts)
- Statutes The following explanation defines which of the 3 criteria for legal duties (Peer standards / Oral and written agreements (contracts) / Statutes): Should be the same across the board (consistent) - generally accepted practice ---------CORRECT ANSWER-----------------Peer standards The following explanation defines which of the 3 criteria for legal duties (Peer standards / Oral and written agreements (contracts) / Statutes): Policies are contracts & outlines the duties of each party. Can be enforced under law ---------CORRECT ANSWER-----------------Oral and written agreements (contracts) The following explanation defines which of the 3 criteria for legal duties (Peer standards / Oral and written agreements (contracts) / Statutes): Written laws open to little interpretation (example: posted speed limit) ------- --CORRECT ANSWER-----------------Statutes The authority an agent has to act on behalf of the insurance company can be what 5 types of authority? ---------CORRECT ANSWER------------------ Actual (or expressed)
- Apparent
- Implied
- Estoppel
- No authority Authority that is given to agency by the insurance company is which type of authority? (Actual/expressed, Apparent, or Implied) ---------CORRECT ANSWER-----------------Actual/expressed authority A situation in which the authority of the agent is not specifically expressed or communicated (not in writing or other forms of communication), but it still is consistent with the agent fully exercising the expressed authority granted by the company. This allows the agent to perform all necessary duties required to sell and service the insurance policy - is which type of authority? (Actual/expressed, Apparent, or Implied) ---------CORRECT ANSWER-----------------Implied authority Authority the agent appears to have based on circumstances surrounding that belief (can be misleading). This authority protects the insured from unauthorized acts of the agent (issue between agent & customer) - is which type of authority? (Actual/expressed, Apparent, or Implied) --------- CORRECT ANSWER-----------------Apparent authority T or F: Implied authority can exist without actual authority as well. --------- CORRECT ANSWER-----------------FALSE - Before there can be implied authority, there must first be an actual authority relationship between the insurance company and the agency Which authority describes the following: 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 (aka prevents someone from arguing something or asserting
T or F: Depending on the action, violations of licensing and CE statutes can result in fines, loss of license, or possible criminal prosecution --------- CORRECT ANSWER-----------------True Regulation of the licensing process and the requirement for continuing education are designed to benefit and protect who? ---------CORRECT ANSWER-----------------The consumer What 3 statements help define expectations for the agency's employees and distinguish the agency from its competition, thereby setting the culture? ---------CORRECT ANSWER-----------------Values, vision, and mission statements Which statement describes the heart of the organization (servant spirit, empathy, etc.) ---------CORRECT ANSWER-----------------Value statement Which statement explains the company's current & future goals of company? ---------CORRECT ANSWER-----------------Vision Statement Which statement is action-based. Explains what the company does & how it intends to connect with/serve its customers ---------CORRECT ANSWER-- ---------------Mission Statement What helps a company define what needs to be accomplished and how to accomplish it? ---------CORRECT ANSWER-----------------Goals
Explain what a SMART goal is ---------CORRECT ANSWER------------------ Specific
- Measurable
- Achievable
- Relevant
- Time-based What aspect of the agency is a summary of the agency's values, vision, and mission statements expressed in both the marketplace and community, demonstrating how they differ from competition. Focused on agency's target market(s), positioning its products and areas of specialization, and defining its personality (projected through logo and slogan, and it will be the driving force behind the agency culture) ---------CORRECT ANSWER--------- --------The agency BRAND Agency _____ is a mix of leadership, values, traditions, beliefs, interactions, behaviors, and attitudes— communicates what the work atmosphere is like ---------CORRECT ANSWER-----------------Agency CULTURE Who should model and communicate the desired behaviors within the agency which, in turn, will establish the culture through a top-down formation? ---------CORRECT ANSWER----------------- Leadership/management team What factors impact the agency's operations? (6) ---------CORRECT ANSWER------------------ Agency Workforce (# of employees & their positions)
- Areas of Specialization/Lines of Business (niches)
of Locations, Geographical Size of Operation, and Virtual Environment
(local, national, internation, hybrid/remote)
- Prompt communication
- Coverage placed with a financially sound insurance company To determine insurance companies' financial ratings, the state insurance department gathers data based on many factors such as what? (5) --------- CORRECT ANSWER------------------ Claims experience
- Investment performance
- Management
- Combined ratio
- Surplus to continually analyze financial solvency What are the two ways that 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.
- Check with rating organizations that can provide information about the financial stability of a specific company Is the following an admitted or non-admitted insurance company:
- Licensed by the state
- Standard market
- Their forms rules and rates are regulated
- Their financial condition is monitored by the insurance departments of the states in which they are licensed or domiciled (if the company fails financially, the state's insurance Guaranty Fund protects business written and will step in to make payments on claims, as necessary) --------- CORRECT ANSWER-----------------Admitted insurance company T or F: Admitted insurance companies pay the state a percentage of the written premium, known as a premium tax. These taxes are paid when the insurance company files its annual statement with the insurance department ---------CORRECT ANSWER-----------------True
Is the following an admitted or non-admitted insurance company:
- Used by agencies to insure difficult-to-place risks that admitted carriers often can't afford to cover
- NOT licensed by the state
- NOT obligated to comply with certain insurance regulations (forms, rules, rates, etc)
- No protection from the state's Guaranty Fund for business written --------- CORRECT ANSWER-----------------Non-admitted insurance company Non-admitted insurance companies are often referred to as ______? --------
- CORRECT ANSWER-----------------excess and surplus lines companies Who performs as a wholesale intermediary who places business for the benefit of the agent? ---------CORRECT ANSWER-----------------An excess and surplus lines agent/broker What is one of the reasons for the due diligence requirements with non- admitted insurance companies? ---------CORRECT ANSWER----------------- Because non-admitted insurance companies are NOT protected by the Guaranty Fund of the state or states in which it does business T or F: Every licensed admitted insurance company is required to contribute to the Guaranty Fund. ---------CORRECT ANSWER----------------- True When would one use a non-admitted insurance company? (2) --------- CORRECT ANSWER------------------ Type of risk (too hazardous)
program. ---------CORRECT ANSWER-----------------Captive insurance company What is the name for Captive insurance companies that are formed for ONE entity? ---------CORRECT ANSWER-----------------Parent captive What is the name for Captive insurance companies that are formed for MULTIPLE entities? ---------CORRECT ANSWER-----------------Group captive Which Alternative Market conducts business only in states located in a specific geographic region. This type of company can often be more stable and offer competitive rates by avoiding states prone to high-risk exposures. ---------CORRECT ANSWER-----------------Regional insurance company Which Alternative Market conducts business across the United States. They are larger and provide a great range of coverages. ---------CORRECT ANSWER-----------------National insurance company Which Alternative Market handles 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, such as flood or earthquake. ---------CORRECT ANSWER-----------------Government programs and pools What are some examples of the Alternative Market - "Government programs and pools"? (4) ---------CORRECT ANSWER------------------ Fair Access to Insurance Requirement [FAIR Plan]
- National Flood Insurance Program (NFIP)
- Workers Compensation Assigned Risk Plan
- Federal Crop Insurance Corporation (FCIC) What are the primary functions of reinsurance? (4) ---------CORRECT ANSWER------------------ Increase underwriting capacity
- Provide catastrophe protection
- Stabilize loss experience
- Manage financial ratios Is the following treaty reinsurance or facultative reinsurance: When the insurance company (ceding company) agrees to transfer (cede) certain classes of business to the reinsurance company. The insurance company agrees to cede, and the reinsurance company agrees to accept all business that qualifies, as contained in the agreement. --------- CORRECT ANSWER-----------------Treaty reinsurance Is the following treaty reinsurance or facultative reinsurance: A form of reinsurance that uses offer and acceptance of individual risks in which, under a contract of reinsurance, the reinsurer retains its faculty (ability) to accept or reject each risk offered by the ceding company. Each exposure the ceding company wishes to reinsure is offered to the reinsurer as a single transaction. The reinsurer underwrites every loss exposure individually upon its submission from a ceding company. Each transaction is individually negotiated with respect to terms, conditions, and prices. ------ ---CORRECT ANSWER-----------------Facultative reinsurance T or F: With facultative reinsurance, the reinsurer is NOT obligated to accept any or each submission. ---------CORRECT ANSWER----------------- True
