Study 2 - Sales - LO

Question 1

Describe how sales plans are influenced by the agency’s or brokerage’s objectives and by the insurance markets.

Answer 1

• Sales planning directed by management

• Sales plan considers:
o Characteristics of market segments
o Products available for sale through its insurers

• Market segmentation involves:
o Choosing a client type (target market)
o Refining message to attract prospects from that market
o Turn those prospects into a lead
o Signing the lead as a client

• If intermediary’s insurers cannot meet client needs, agent or broker may
o Use wholesale market
o Send client to another intermediary

Question 2

Describe how agents and brokers can source sales opportunities.

Answer 2

• An insurance intermediary’s primary function is to find qualified buyers for insurance products.
o Insurance products are intangible, thus the buyer must trust the policy will meet their future needs.

• Strategies to source new clients:
o Referrals (most successful)
o Online marketing
o Advertising
o Cold calling (least successful)
o Tracking of expiry dates
o Upselling
o Cross-selling

• Upselling and cross-selling
o Can increase sales and protect intermediaries from E&O claims
o Require permission to contact clients to provide quotes for other insurance products
o Easier to sell to an existing client

Question 3

Outline the factors that influence whether an intermediary will accept a prospect as a client.

Answer 3

• Qualify prospects as
o Target clients according to sales plan
o Requiring products offered by markets represented

• Use effective questioning to determine:
o Is this an appropriate potential client?
o Do they qualify for products the intermediary can provide?
o Is this a person who should be invited into your business?

• Information that can help determine physical and moral hazards include:
o Claims
o Loss payees
o Premium payment history

Question 4

Describe how the risk analysis process leads to the identification of exposures.

Answer 4

• Risk analysis identifies and measures risk.

• Asses the following to identify prospect’s loss exposures:
o Lifestyle
o Career choice
o Socioeconomic bracket
o Hobbies
o Personal habits
o Attitude toward risk

• Identify the following for a client:
o What is exposed to loss?
o How is it exposed to loss?
o Moral hazards
o Financial consequences of loss

Question 5

5 Explain the value of loss control and prevention, illustrating uses of this technique by practical examples.

Answer 5

• Risk control involves safety precautions that
o Help prevent perils
o Help reduce the extent of loss

• Tangible property risk control tries to prevent:
o Fires
o Theft
o Vandalism
o Collisions and other accidents

• Methods of risk control
o Alarms
o Detection devices
o Good maintenance
o Checking on unoccupied houses
o Electronic security
o Supervising children
o Posting signs to warn of danger

Question 6

Outline the progress of a typical client sales meeting.

Answer 6

• First meeting is about collecting information:
o Property inspection if possible
o Qualifying prospect as a client
o Reviewing current policy
o Ask why prospect is changing agents

• Responses help intermediary determine if they can meet prospect needs, such as:
o Coverage
o Service
o Payment plan

• If prospect is not ready to buy, follow up at agreed time.
o Confirm that
• All questions have been answered
• Remind client of new coverage benefits
• Ask if proposal can be sent in writing