Study 2 - Sales - Application Question

Question 1

Elsa is qualifying a prospective client, Jared, who is in the market for a variety of insurance products,
including coverage for his large house and expensive possessions. He is switching from another insurer.
What information should Elsa gather about the following?

a. What are five (5) pieces of information Elsa should ask about while qualifying Jared as a prospective client? Why does she want those pieces of information? (5 marks)

b. What are five (5) criteria that Elsa will consider when deciding whether Jared is a client that will fit
her target niche? Why is each criterion important to her decision? (5 marks)

c. When reviewing Jared’s loss history, Elsa learns that he claimed several valuable paintings were taken during a break-in. It was subsequently discovered that some of the pieces claimed were still in his possession. As Elsa considers whether this will affect her decision to take Jared on as a client, what five (5) pieces of information should Elsa consider regarding this discovery?
(5 marks)

Answer 1

Answers:
a. Factors that assist in qualifying clients and why they matter (any five of the following; marks allowed
for other valid responses):

• Who clients are—their family details and lifestyle (Do Jared and his family fit into Elsa’s target
niche?)

• Where they are located (Location can affect premiums for many types of policies.)

• The type of risk to be insured—dwelling or business (Different policies are needed for personal
dwellings and businesses.)

• The prospect’s loss history (If Jared has had many losses, this could be something to look at in
more depth.)

• Their financial condition (If Jared has had multiple loss payees, he may be experiencing financial
difficulties and could become an accounts receivable problem.)

• Their service needs (Why did they call? Issues with service? Have there been payment or claims
issues?)

• How they heard of the intermediaries’ services (What marketing strategies are working well?)

b. Criteria for selecting clients who fit an intermediary’s target niche and why they are important (any five of the following; marks allowed for other valid responses):

• Age
• Marital status

• Business interests (Business and personal policies are different—does Jared need a business
policy in addition to a personal policy?)

• Hobbies (May contain indications of risk levels; may involve things that need coverage)

• Exposure to risk (What is Jared’s level of risk tolerance? This will affect the types of coverage
Elsa will offer him.)

• Best protected by the types of insurance products and services their insurers provide

c. Considerations regarding a problematic loss history (marks allowed for other valid responses):
• Is there a reason for this behaviour?

• Does this client belong in a high-risk market?
• Can the agency or brokerage arrange coverage for this type of client?
• Is it beneficial to do business with this applicant?
• What would management want?