Chapter 5 Flashcards
What is the expression of purpose that states the company’s reason for being known as?
A mission or vision statement
What are SMART goals?
Specific, measurable, attainable, realistic, and time-based
Which of the following is not true regarding short-term plans?
A company often makes long-term plans within shorter-term plans.
Which of the following is an approach to strategic planning that assesses the strengths and
weaknesses of an organization and the opportunities and threats it faces?
SWOT analysis
Which of the following are examples of internal strengths and weaknesses that insurers need to
assess?
Expenses, geography, and culture
Rationale: Expenses, geography, and culture are all internal issues that insurers need to assess and
review. The economy, legislative and political concerns, and competition and market conditions are all
external issues
Catastrophic losses can severely affect an insurer’s plan if not accounted for. Which of the following
may their ripple effect lead to?
They can make reinsurance harder and more expensive for the insurer to buy.
Which of the following is true regarding individual branches that make up a region?
Individual units make up the branch and individual underwriters make up the unit.
To avoid problems, departments or other operational units may do which of the following when they
begin setting their tactics?
Involve other departments or units
Which of the following is not true regarding budgets?
A budget is the hardest part of a business plan to control
. What is it called when companies redo their budgets each year and begin at zero?
Zero-based budgeting
List five decisions an insurer must make before it receives its first submission. (5 marks)
What products the insurer will sell
* What licences the insurer will need
* How much capital will be required
* Who the target clients will be
* Where the client base is located
* How it will reach the client base
* How much business the insurer will write
* What kinds of expense it can expect
* What staff the insurer will need
What are five elements of a typical company plan. (5 marks)
Elements of a company plan (any five of the following):
* Mission or vision statement
* Strategic direction and long-term goals
* Situational issues
* Obstacles
* Shorter-term goals
* Budgets
* Monitoring procedures
List five pieces of information a planner examines while preparing a premium budget. (5 marks)
Information required for premium budgets (any five of the following):
* Policy expiration dates
* Hit ratio for new business
* New products
* New brokers
* New territories
* Rate changes and inflation
* Sales growth
* Changes in the market
Internal strengths and weaknesses for a SWOT analysis (any five of the following):
Staffing: Are there enough staff members to achieve the growth projections?
* Expenses: How high are expenses, and how are they managed?
* Corporate problems: If the insurer is a subsidiary of a foreign parent, are there any problems with the
parent?
Financial strength and reputation: Does the insurer have the capital resources needed to meet its
objectives, or will it need an infusion of capital?
* Culture: A planner must consider many aspects of the internal culture, such as whether the insurer’s
culture is a nimble one that can change direction quickly and easily without resistance, or a slowmoving operation that cannot make fast decisions; whether it is a culture that appreciates innovation;
whether it is oriented toward large accounts or toward service; and whether it is team-oriented or
structured to reward individual success.
