CAIB 4 - Exam Practice Questions and
Answers
Question 1
Different types of relationships exist at different levels and as a result there are a
variety of relationship types. Indicate which one best describes your relationship with
the majority of your clients and why.
Correct Answer
Face-to-face;
This type of relationship is characterized by client interaction with the company on a
regular basis an in a personal environment.
The client actually meets employees of the company, they see talk with each other.
They may or may not develop very close friendly, personal relationships largely
because of the nature of the interaction.
Page 1 of 87
,Question 2
Identify and discuss any two ongoing training programs every brokerage needs.
Correct Answer
Quality service
Service training should concentrate on problem solving. Client service employees
should view themselves as 'problem-solvers' who are empowered to take action to
generate satisfied clients.
Sales Training
Sales training should teach employees how to sell in an environment where the
long-term goal is to build client relationships. This program should emphasize;
listening skills, problem solving, consultative selling, building trust and follow-up.
Product & Service Knowledge
It is important that employees not only by thoroughly trained and highly competent
in their own function but have expertise in other aspects of the brokerage, so that
they will be able to recognize sales and service opportunities and make referrals to
other employees.
Leadership Training
The leader must share the values and missions of the brokerage and lead the effort
to satisfy clients and achieve the brokerage's strategic plan. Therefore, for managers
and supervisors training should concentrate on;
How to train
How to coach and counsel
How to create a motivating environment
How to empower employees.
Page 2 of 87
,Question 3
There are a number of sources from which a brokerage's revenue is derived. Identify
and discuss three of these sources
Correct Answer
Commissions; there are four production variables used in calculating commission;
retention, changing insurance rates, up-selling and cross-selling and new clients
obtained.
Contingent Commissions; if a contingent profit sharing agreement is in place, due
to the uncertainty of earning this commission, it should not be included in the
budget.
Investment Income; interest received on investments.
Other Income; rental income, service fees, management fees etc.
Question 4
Describe three major ways in which technology has significantly changed the
effectiveness of brokers
Correct Answer
Enhance profitability
Build client relationships
Improve effectiveness
Page 3 of 87
, Question 5
Identify and explain the components of a monitoring process
Correct Answer
A Management Information System; gathers and presents information in a form
useful for measuring performance. To be effective the management information
system should have the following characteristics; simplicity, accessibility, merge
capability and adaptability.
Standards & Benchmarks; serves as a base for measuring performance. Involves
historical standards and engineered standards.
Results; should be measured for the brokerage overall and separately for key
functions or departments and individual employees. This is accomplished using
financial data and sales data.
Corrective Action; identifies areas of concern as early as possible in order that
corrective action may be undertaken.
Question 6
A technology plan will affect all aspects of the brokerage and its relationships with its
clients, prospects and the insurance companies.
Describe areas the brokerage will have to address in its technology planning process
Correct Answer
Understanding Needs
Analyze the current business situation
Project the future
Criteria to Evaluate Technology
Reporting Capabilities
Capacity
Support & Training
Cost
Implementation
Contingency Plan
Maximization
Page 4 of 87
Answers
Question 1
Different types of relationships exist at different levels and as a result there are a
variety of relationship types. Indicate which one best describes your relationship with
the majority of your clients and why.
Correct Answer
Face-to-face;
This type of relationship is characterized by client interaction with the company on a
regular basis an in a personal environment.
The client actually meets employees of the company, they see talk with each other.
They may or may not develop very close friendly, personal relationships largely
because of the nature of the interaction.
Page 1 of 87
,Question 2
Identify and discuss any two ongoing training programs every brokerage needs.
Correct Answer
Quality service
Service training should concentrate on problem solving. Client service employees
should view themselves as 'problem-solvers' who are empowered to take action to
generate satisfied clients.
Sales Training
Sales training should teach employees how to sell in an environment where the
long-term goal is to build client relationships. This program should emphasize;
listening skills, problem solving, consultative selling, building trust and follow-up.
Product & Service Knowledge
It is important that employees not only by thoroughly trained and highly competent
in their own function but have expertise in other aspects of the brokerage, so that
they will be able to recognize sales and service opportunities and make referrals to
other employees.
Leadership Training
The leader must share the values and missions of the brokerage and lead the effort
to satisfy clients and achieve the brokerage's strategic plan. Therefore, for managers
and supervisors training should concentrate on;
How to train
How to coach and counsel
How to create a motivating environment
How to empower employees.
Page 2 of 87
,Question 3
There are a number of sources from which a brokerage's revenue is derived. Identify
and discuss three of these sources
Correct Answer
Commissions; there are four production variables used in calculating commission;
retention, changing insurance rates, up-selling and cross-selling and new clients
obtained.
Contingent Commissions; if a contingent profit sharing agreement is in place, due
to the uncertainty of earning this commission, it should not be included in the
budget.
Investment Income; interest received on investments.
Other Income; rental income, service fees, management fees etc.
Question 4
Describe three major ways in which technology has significantly changed the
effectiveness of brokers
Correct Answer
Enhance profitability
Build client relationships
Improve effectiveness
Page 3 of 87
, Question 5
Identify and explain the components of a monitoring process
Correct Answer
A Management Information System; gathers and presents information in a form
useful for measuring performance. To be effective the management information
system should have the following characteristics; simplicity, accessibility, merge
capability and adaptability.
Standards & Benchmarks; serves as a base for measuring performance. Involves
historical standards and engineered standards.
Results; should be measured for the brokerage overall and separately for key
functions or departments and individual employees. This is accomplished using
financial data and sales data.
Corrective Action; identifies areas of concern as early as possible in order that
corrective action may be undertaken.
Question 6
A technology plan will affect all aspects of the brokerage and its relationships with its
clients, prospects and the insurance companies.
Describe areas the brokerage will have to address in its technology planning process
Correct Answer
Understanding Needs
Analyze the current business situation
Project the future
Criteria to Evaluate Technology
Reporting Capabilities
Capacity
Support & Training
Cost
Implementation
Contingency Plan
Maximization
Page 4 of 87
