Chapter 4 - Distrubution networks and plan management

Question 1

Discuss the difference between a company employed agent and an independent agent or an exclusive agent

Answer 1

Company employed agent works directly for the insurer. He or she is part of the company staff

and independent or exclusive agent is like an entrepreneur. They are paid a commission or a combination of base salary and is responsible for their own expenses. The contract between the insurer and agent will determine who owns the contact list

Question 2

List the elements that an insurer’s due diligence review of a producer include:

Answer 2

network analysis
ownership
business processes
businesss plan
financial conidition
staff
computers
other insureres

Question 3

network analysis

Answer 3

assessment criteria
plans for growth 
capacity for growth
support fo rinsurer
ability to sell
mix of business
producer staff
customer loyality
receptiveness of other functions

Question 4

ownership

Answer 4

insurers may invest in the producer
conflict of interest
other investors
controlling interest 
subsidiary or branch
potential proems
goals of new owners

Question 5

financial analysis

Answer 5

adequacy of capital
a long term partner
expenses

Question 6

business plan

Answer 6

record for growth
plans for growth
dealing with growth

Question 7

business processeos

Answer 7

organizational structure
resources
daily efficiency
absteees

Question 8

staff

Answer 8

staff must be qualified
experience and skills
business processed
key people

Question 9

computer systems

Answer 9

currency of computers (cyber security)
sources of systems
capability of systems (can the producers and underwriter syste talk to each other)

Question 10

other insurers

Answer 10

what is producers arrangement with other producers
comparison of eligible criteria
competitive advantage
examination is reciprocal