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RMI 3502 > Exam 1 Part C > Flashcards

Exam 1 Part C Flashcards

1
Q

Why is marketing important?

A

”- About half of loading expenses

- Often first and only exposure the client has to the carrier”

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2
Q

Independent Agency

A 
"- Represent more than one carrier
- Independent contractors
- Pay own expenses, including EE's
- Own expiration rights: client list belongs to agent
"
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3
Q

How are Independent Agents Compensated?

A

Commision plus profit sharing

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4
Q

Independent Agency Profits Based On?

A

”- Underwriting profitibality

- Premium volume (bigger is better)”

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5
Q

What is the largest asset of an independent agent?

A

The client list (“book of business”)

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6
Q

Who does Independent Agent legally represent?

A

Insurer

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7
Q

Actual or Expressed Authority

A

When principle gives authority under agency contract

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8
Q

Apparent or Implied Authority

A

When third party would reasonablly believe that the principle has given agent the right to act on their behalf

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9
Q

Who bears the risk in apparent or implied authority?

A

Carrier

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10
Q

Broker

A

”- Legal Representative of insurance consumer

- Paid a commision or fee”

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11
Q

Who do brokers commonly focus efforts on?

A

“A” rated companies

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12
Q

Broker Record Letter (BOR)

A

Contract that gives authority from a firm to the broker to represent their risk needs

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13
Q

Exclusive Agency

A

”- Agents are independent contractors representing a single insurer

  • Paid with commission
  • Allstate, State Farm, Nationwide

”

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14
Q

Exclusive Agency Disadvantages

A
  • Do no own expiration rights - belongs to carrier
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15
Q

“Exclusive Agency Advantages

A

”- Carrier does marketing

  • Carrier spends a lot of money on brand and marketing
  • "”Business comes to you”””
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16
Q

Direct Marketing

A

”- Direct Writer = insurer not using independent agents

  • Direct Marketer = insurer not using a marketing intermediary
  • Includes internet, call centers, direct mail”
17
Q

Direct Writer

A

”- EE of insurer market, market insurer’s product

  • Usually not independent contractors; may work in facilities of the insurer
  • Receive a salary and some bonus compensation system”
18
Q

Powers of the Agent

A

”- Binding Coverage

- Binder”

19
Q

Binding Coverage

A

”- Ability of the agent to create an enforceable contract with the policy holder
- Limited to specific lines and limited amounts of coverag”

20
Q

Binder

A

Written acknowledgement of oral contract

21
Q

Agent Functions

A 
"- Prospecting (sourcing business)
- Policy Issuance
- Collect premium: agency bill vs direct bill
- Customer service
- Claims handling
"

RMI 3502 (20 decks)

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