CISR AGENCY OPERATIONS EXAM ACTUAL EXAM 300
QUESTIOS AND CORECT DETAILED ANSWERS WITH
RATIONALES (VERIFIED ANSWERS) |AGRADE
Types of Stakeholders - ANSWER: managers and employees
customers
insurers
vendors
industry associations
government
Transfer - ANSWER: Insurance: transfer of financial consequence to an insurance
company
Non Insurance: when a customer transfers financial consequences to another by
contract or agreement
Retention - ANSWER: Active: when a customer knows before the loss that they are
responsible for all or part of the loss
Passive: Whoops! when a client finds out after a loss occurs that they are responsible
What is NOT one of the four benefits of ethical behavior? - ANSWER: Ethical
behavior encourages governmental action
Describe the standard of care an insurance agency owes to an insurance company -
ANSWER: loyalty
good faith
reasonable care
contractual duty
Describe actual authority - ANSWER: when the agency is expressly given the
authority in the agency contract
Describe a contract - ANSWER: Oral or written agreements between two parties that
creates an obligation to do or not do a particular thing
What are the four benefits of ethical behavior? - ANSWER: To be recognized as a
knowledgeable insurance professional within the community
To gain public trust and confidence
To avoid government regulation
To enhance credibility with customers and companies
What is the risk management process? - ANSWER: Risk Identification
Risk analysis
Risk control
Risk finance
Risk administration
, Explain the five steps of risk management - ANSWER: Risk identification: identify the
customers exposure to loss
Risk analysis: determine frequency or severity of the exposure. How much could a
loss actually cost the customer
Risk control: understand what methods can be implemented to eliminate or reduce
cost associated with exposure
Risk finance: fund losses by user either internal or external dollars
Risk administration: Implement and monitor the customers risk management
program
Stakeholders - ANSWER: People who have the potential to be affected by any action
taken by an organization. Any group or individual who is affected by the
achievements of a firm's objectives
Risk Control Methods - ANSWER: Avoid: not always practical
Prevent: reduces frequency
Reduce: reduces severity
Segregation: includes separation or duplication
Transfer: can be physical transfer or contractual transfer
What is the difference between a broker and an agent/producer? - ANSWER: Brokers
do not have binding authority
How would you best describe an agency stakeholder? - ANSWER: The primary
stakeholders are any group or individual who is affected by the achievement of a
firm's objective
Which source of revenue is typically the largest source of income for an insurance
agency? - ANSWER: Commission
What does a large number of locations mean for how an agency operates? -
ANSWER: It may mean some features of the agency are centralized
List the four major classes of exposure to loss - ANSWER: Property
Human Resources
Liability
Net Income
What are the methods of identifying loss exposures? - ANSWER: Interview
Checklist
Physical inspection
Activity analysis
Document review
Advertising/website
Flow charts
Loss history
QUESTIOS AND CORECT DETAILED ANSWERS WITH
RATIONALES (VERIFIED ANSWERS) |AGRADE
Types of Stakeholders - ANSWER: managers and employees
customers
insurers
vendors
industry associations
government
Transfer - ANSWER: Insurance: transfer of financial consequence to an insurance
company
Non Insurance: when a customer transfers financial consequences to another by
contract or agreement
Retention - ANSWER: Active: when a customer knows before the loss that they are
responsible for all or part of the loss
Passive: Whoops! when a client finds out after a loss occurs that they are responsible
What is NOT one of the four benefits of ethical behavior? - ANSWER: Ethical
behavior encourages governmental action
Describe the standard of care an insurance agency owes to an insurance company -
ANSWER: loyalty
good faith
reasonable care
contractual duty
Describe actual authority - ANSWER: when the agency is expressly given the
authority in the agency contract
Describe a contract - ANSWER: Oral or written agreements between two parties that
creates an obligation to do or not do a particular thing
What are the four benefits of ethical behavior? - ANSWER: To be recognized as a
knowledgeable insurance professional within the community
To gain public trust and confidence
To avoid government regulation
To enhance credibility with customers and companies
What is the risk management process? - ANSWER: Risk Identification
Risk analysis
Risk control
Risk finance
Risk administration
, Explain the five steps of risk management - ANSWER: Risk identification: identify the
customers exposure to loss
Risk analysis: determine frequency or severity of the exposure. How much could a
loss actually cost the customer
Risk control: understand what methods can be implemented to eliminate or reduce
cost associated with exposure
Risk finance: fund losses by user either internal or external dollars
Risk administration: Implement and monitor the customers risk management
program
Stakeholders - ANSWER: People who have the potential to be affected by any action
taken by an organization. Any group or individual who is affected by the
achievements of a firm's objectives
Risk Control Methods - ANSWER: Avoid: not always practical
Prevent: reduces frequency
Reduce: reduces severity
Segregation: includes separation or duplication
Transfer: can be physical transfer or contractual transfer
What is the difference between a broker and an agent/producer? - ANSWER: Brokers
do not have binding authority
How would you best describe an agency stakeholder? - ANSWER: The primary
stakeholders are any group or individual who is affected by the achievement of a
firm's objective
Which source of revenue is typically the largest source of income for an insurance
agency? - ANSWER: Commission
What does a large number of locations mean for how an agency operates? -
ANSWER: It may mean some features of the agency are centralized
List the four major classes of exposure to loss - ANSWER: Property
Human Resources
Liability
Net Income
What are the methods of identifying loss exposures? - ANSWER: Interview
Checklist
Physical inspection
Activity analysis
Document review
Advertising/website
Flow charts
Loss history
