CICmInsurance mCompanymOperationsmStudymGuide m
Explainmmnnthemmnndifferencemmnnbetweenmmnnstrategy,mmnnstrategicmmnnplanning,mmnnandmmnnstrategicmmnnplanmmnn-
mmnn -
strategy:mmnnthoughtful,mmnndeliberatemmnnplanmmnnofmmnnaction;mmnnchoosesmmnntommnnbemmnnclearmmnnaboutmmnnthemm
nn company's mmnndirection mmnn inmmnn relationmmnntommnnwhatmmnnismmnn happeningmmnn inmmnnammnndynamicmmnnenvironme
nt;mmnnanswersmmnnthemmnnquestionmmnn"how?"mmnnasmmnninmmnnhowmmnnwillmmnnwemmnnachievemmnnourmmnnaimmmnnofmmnnc
reatingmmnnandmmnnnurturingmmnnammnnsuccessfulmmnninsurancemmnncompanymmnn
-
strategicmmnnplanning:mmnnthemmnnprocessmmnnusedmmnntommnncreatemmnnthemmnnstrategicmmnnplan;mmnnrunsmmnnanmmnnER
Mmmnnanalysis,mmnnwhichmmnndeterminesmmnnriskmmnnandmmnnopportunities;mmnnconductsmmnnammnnSWOTmmnnanalysism
mnn andmmnn helpsmmnn answermmnn thesemmnn questions--
mmnn wheremmnnaremmnn wemmnn now?mmnn wheremmnn aremmnn wemmnn going?mmnn how mmnn willmmnn wemmnn getmmnn there?mmnn
-
strategicmmnnplan:mmnnthemmnnformulatedmmnnroadmapmmnnthatmmnndescribesmmnnhowmmnnthemmnncompanymmnnexecut
esmmnnitsmmnnchosenmmnnstrategy;mmnnprovidesmmnnanswersmmnnfrommmnninitialmmnnSWOT;mmnnincludesmmnnvalues,mmnnvis
ion,mmnnandmmnnmissionmmnnstatements
whatmmnnaremmnnthemmnnquestionsmmnnthemmnnEMTmmnnmustmmnnanswersmmnnbeforemmnnitmmnnstartsmmnnthemmnnstrategicm
mnn planningmmnn process?mmnnAndmmnn whatmmnn sourcesmmnn of mmnninfommnn willmmnnbemmnn needed mmnn tommnn answermmnn thes
emmnnquestions?mmnn-
mmnn Threemmnn questions:mmnn Whatmmnnaremmnnwemmnnnow?mmnn Wheremmnn aremmnn wemmnn going?mmnn Howmmnn willmmnnwemmn
n getmmnn there?mmnn
SourcesmmnnofmmnnInfo:mmnnOrganizationalmmnnvalues,mmnnmarketmmnntrends,mmnnregulatorymmnnguidelines,mmnncompe
titivemmnnanalysis,mmnnriskmmnnappetite
Whatmmnntoolsmmnncanmmnnexecutivemmnnmanagementmmnnteammmnnusemmnntommnnidentifymmnnmarketplacemmnnreadine
ssmmnnandmmnnvaluemmnnpropositionsmmnntommnndeterminemmnncapitalmmnnstructure,mmnnsurplusmmnnrequirements,mmnna
ndmmnninvestmentmmnnsources?mmnnthinkmmnnmemorymmnnaidmmnnstrategicmmnnmgmtmmnnFIEmmnn-
mmnn strategy mmnn formulation, mmnn strategy mmnn implementation, mmnn strategy mmnn evaluation
identifymmnnandmmnndescribemmnnthemmnnprimarymmnncompanymmnnstructuresmmnnandmmnncharacteristicsmmnn-
mmnn 1. mmnnstockmmnninsurancemmnncompany:mmnnownedmmnn bymmnn stockholders mmnn (investors), mmnnprimary mmnn objecti
vemmnnismmnnprofit,mmnneasemmnnof mmnncapitalization,mmnnmergersmmnnandmmnnacquisitionsmmnneasier,mmnnbrandingmmnnism
mnn easier, mmnn moremmnn pressuremmnn onmmnn toplinemmnn growthmmnn
,2.mmnnmutualmmnninsurancemmnncompany:mmnnownedmmnnbymmnnpolicyholders,mmnnprovidesmmnncoveragemmnnatmmnnormm
nn nearmmnn themmnncostmmnnof mmnndoingmmnnbusiness, mmnn profitsmmnnusedmmnntommnnpay mmnndividendsmmnnormmnn usedmmnn to
mmnn reducemmnnfuturemmnnpremiums, mmnn focusmmnn ismmnn onmmnn bottommmnn linemmnn results,mmnn lessmmnn pressuremmnn onmmn
n day-to-
daymmnnresults,mmnnusuallymmnnverymmnnstable,mmnnexpansionmmnnmoremmnndifficultmmnnbecausemmnnsurplusmmnnmustmmn
n bemmnn builtmmnn overmmnn time, mmnn mergersmmnn andmmnn acquisitions mmnn moremmnn difficultmmnn
3.mmnnreciprocalmmnninsurancemmnncompany:mmnninterinsurancemmnnexchange-
mmnn individuals mmnnormmnn organizations mmnnjoinedmmnntogether,mmnnsubscribers mmnn insuremmnnonemmnn another, mmnnless
mmnn pressuremmnn onmmnn profits mmnnbecausemmnn they mmnn operatemmnnclosemmnntommnnthemmnn costmmnn ofmmnn doingmmnn busin
ess,mmnneasiermmnntommnncapitalize,mmnnusuallymmnnoffermmnnsinglemmnnlinemmnnof mmnnbusiness,mmnnsubscribersmmnnmakem
mnn premiummmnndeposits,mmnn managedmmnn bymmnn anmmnnattorney mmnninmmnnfact, mmnn statemmnn insurancemmnnregulationm
mnn may mmnn bemmnn lessmmnn strict, mmnn difficultmmnn tommnn raisemmnn additionalmmnn capitalmmnn
4.mmnnhybridmmnnstructures:mmnnusemmnnof mmnnholdingmmnncompaniesmmnntommnnownmmnnandmmnnoperatemmnndifferentmmn
n company mmnn structures,mmnn canmmnnbemmnnmademmnn upmmnn of mmnn stock, mmnn mutual, mmnn reciprocal, mmnn andmmnn othermm
nn company mmnn structures
whatmmnnaremmnnthemmnntwommnnapproachesmmnnthemmnnleadmmnntommnnthemmnnconstructionmmnnofmmnnthemmnncompany's
mmnn culture, mmnn describemmnn eachmmnn - mmnn 1. mmnn passivemmnn approach-
mmnn culturemmnncreatedmmnnovermmnntime. mmnnemployees mmnnobservemmnnbehaviormmnnandmmnnvaluesmmnn of mmnn mgmtmm
nn andmmnnfellow mmnnemployees mmnnfunctioningmmnn inmmnnself mmnn protectivemmnnmode. mmnnfew mmnn ormmnnnommnn standar
dsmmnnregardingmmnnworkmmnnbehavior;mmnnhighermmnnlevelsmmnnofmmnninstabilitymmnnandmmnninconsistency, mmnnturnov
ermmnnhigh,mmnnlowmmnnjobmmnnsatisfactionmmnn
2.mmnnactivemmnnapproach-
mmnn deliberatemmnn culturemmnn creation,mmnn leadership mmnn modelsmmnn behaviors mmnnthatmmnn createmmnn themmnndesired
mmnn culture, mmnnsetmmnn stagemmnn formmnnsuccess mmnn by mmnn establishingmmnn solidmmnnfoundation, mmnnpositivemmnn employ
eemmnnengagement,mmnncustomermmnnretention,mmnngrowthmmnntargetsmmnnbecomemmnnmoremmnninmmnnsync
describemmnnthemmnndistinctmmnnpurposemmnnof mmnneachmmnnkindmmnnofmmnnstatement:mmnnvalues,mmnnvision,mmnnandmmnn
missionmmnn-mmnn-
valuesmmnnstatement:mmnnammnnstatementmmnnofmmnncommonlymmnnheld,mmnncoremmnnvalues,mmnnthatmmnndefinemmnnthem
mnn whommnn ofmmnn themmnnorganization. mmnnitmmnnoftenmmnnismmnnreferredmmnntommnn asmmnncompany's mmnncodemmnn of mmnn co
nduct;mmnndescribesmmnnthemmnncentralmmnntheme,mmnnormmnntopmmnnpriorities,mmnnofmmnnthemmnnorganization'smmnncult
uremmnn"who"mmnnof mmnnthemmnnorganization
,-
visionmmnnstatement:mmnnthemmnnlightmmnnthatmmnnguidesmmnnthemmnncompanymmnntommnnitsmmnnhopesmmnnandmmnnambiti
onsmmnnformmnnthemmnnfuture;mmnnaremmnnthemmnnfoundationmmnnformmnnthemmnndevelopmentmmnnandmmnnimplementatio
nmmnnofmmnnammnnlong-
termmmnnstrategicmmnnplanmmnn"whatmmnndommnnwemmnnwantmmnntommnnbemmnnwhenmmnnwemmnngrowmmnnup"
-
missionmmnnstatement:mmnnshortmmnnbutmmnnpowerfulmmnnstatementmmnnregardingmmnnthemmnnreasonmmnnanmmnnorgani
zationmmnnexists;mmnnitmmnnismmnnthemmnnwhymmnnstatementmmnnthatmmnnstatesmmnnammnncompany'smmnncoremmnnpurposemm
nn andmmnnoverallmmnn goal;mmnnitmmnngenerally mmnndealsmmnnwithmmnnthemmnn heremmnn andmmnn now;mmnnidentifies mmnn ammnnco
mpany'smmnnoperationalmmnngoal,mmnnmeaningmmnnthemmnnproductsmmnnitmmnnprovides,mmnnthemmnnmarket(s) mmnnitmmnns
ervesmmnnandmmnngeographicalmmnnterritories;mmnnwhatmmnnthemmnnorganizationmmnnneedsmmnntommnndommnninmmnnthemmnn
momentmmnntommnnachievemmnnvision;mmnn"why"
Whatmmnnaremmnnthemmnn3mmnndutiesmmnnofmmnnthemmnnboardmmnnof mmnndirectorsmmnn-mmnndutymmnnofmmnncare--
mmnn mustmmnnmakemmnnprudentmmnn decisions mmnnusingmmnn duemmnn diligence, mmnngatheringmmnn allmmnn relevantmmnnfactsm
mnn beforemmnn makingmmnn decisions mmnn
dutymmnnof mmnnloyalty--
mmnn keepmmnn interestmmnnofmmnnthemmnn organization mmnn themmnnprimary mmnn focus, mmnn may mmnn includemmnn disclosuremmnn
ofmmnnconflictsmmnnof mmnninterest
dutymmnnof mmnnobedience--
mmnn mustmmnnbemmnn carefulmmnntommnn follow mmnnthemmnn organization's mmnn bylaws, mmnn statedmmnnpurpose, mmnn andmmnn ap
plicablemmnnlaws
whatmmnnaremmnntypicalmmnnboardmmnncommitteesmmnn-mmnnauditmmnncommittee
nominatingmmnncommittee
governancemmnncommittee
financemmnncommittee
typicalmmnnexecutivemmnnpositionsmmnnyoummnnfindmmnninmmnnthemmnninsurancemmnncompanymmnn-
mmnn CEO,mmnnCFO, mmnnPresident,mmnn VP mmnn Claims, mmnn VP mmnn salesmmnnandmmnnmarketing, mmnnChief mmnnUnderwritingmmn
n Officer, mmnn Chief mmnn Claimsmmnn Officer
, Whatmmnnismmnnthemmnnrelationshipmmnnbetweenmmnnammnncompany'smmnnriskmmnntolerancemmnnandmmnnriskmmnnappetite
mmnn andmmnn themmnn EMT'smmnn decision-makingmmnn process?mmnn -
mmnn Risk mmnnTolerance:mmnn Themmnn maximummmnn amountmmnnof mmnnrisk mmnn ammnnpersonmmnnormmnn organization mmnn ismmnn
willingmmnntommnnassumemmnn
RiskmmnnAppetite:mmnnThemmnnmaximummmnnamountmmnnofmmnnriskmmnnthemmnnorganizationmmnnismmnnwillingmmnntommnnac
ceptmmnnwhilemmnnstrivingmmnntommnnmeetmmnnitsmmnnstrategicmmnnandmmnntacticalmmnnplans
whatmmnnbusinessmmnndecisionsmmnnresultmmnnfrommmnnriskmmnnappetitemmnn-mmnn-singlemmnnlinemmnnormmnnmultiline--
mmnn aremmnn yoummnngoingmmnntommnn focusmmnn onmmnn onemmnnlinemmnn of mmnn business mmnnandmmnnbecomemmnn andmmnn expert
mmnn andmmnn risk mmnnlosingmmnn themmnnmarket, mmnn ormmnnchoosemmnn tommnn havemmnn balancemmnn itmmnn needsmmnntommnn survi
vemmnnduringmmnnmarketmmnnchangesmmnnasmmnnitmmnnismmnnraremmnntwommnnormmnnmoremmnnlinesmmnnofmmnninsurancemmnnwi
llmmnnbemmnnaffectedmmnninmmnnanymmnngivenmmnnmarketmmnncycle,mmnnexpensemmnnmaymmnnbemmnngreatermmnnasmmnnmaymmn
n needmmnn multiplemmnn uw mmnn teamsmmnn formmnn examplemmnn
-specialistmmnnormmnngeneralist--
mmnn focusmmnn only mmnnonmmnnfew mmnn types mmnn of mmnnrisk mmnnormmnn writemmnnallmmnn differentmmnn types mmnn of mmnn businesse
smmnnrathermmnnthanmmnnfocusingmmnnonmmnnspecificmmnntypesmmnn
-geographicmmnnfootprint--
mmnn wheremmnndommnnyoummnn wantmmnntommnnwrite, mmnn ammnnsinglemmnn statemmnnormmnn multiplemmnn statesmmnn wheremmnnitmm
nn wantsmmnn tommnn sellmmnn ormmnn willmmnn itmmnn startmmnn inmmnn onemmnn statemmnn andmmnn expand mmnn overmmnn timemmnn
-receptionmmnnbymmnndistribution--
mmnn how mmnnreceptivemmnnaremmnnagentsmmnninmmnn themmnnareammnntommnn new mmnn companies, mmnnconsidermmnn regulator
ymmnnandmmnnjudicialmmnnenvironmentsmmnn
-barriermmnntommnncompetition--
mmnn success mmnn inmmnn onemmnnstatemmnndoesmmnnnotmmnnguaranteemmnnsuccess mmnn inmmnnanother, mmnn competition mmnn ca
nmmnnbemmnntoughermmnninmmnnsomemmnnmarketsmmnnthanmmnnothersmmnn
-spreadmmnnofmmnnrisk--
mmnn companies mmnn writemmnnpolicies mmnn inmmnn allmmnnareasmmnn of mmnn ammnnsinglemmnnstatemmnnormmnn inmmnn multiplemmnn stat
es,mmnnthemmnnlargermmnnthemmnnareammnninmmnnwhichmmnnammnncompanymmnnwrites,mmnnthemmnngreatermmnnthemmnnspreadm
mnn whichmmnnhelpsmmnn minimizemmnn exposuremmnn tommnn ammnn catmmnneventmmnnthatmmnncouldmmnn affectmmnn majority mmnnof
mmnn theirmmnn policies mmnn atmmnn samemmnn timemmnn
Explainmmnnthemmnndifferencemmnnbetweenmmnnstrategy,mmnnstrategicmmnnplanning,mmnnandmmnnstrategicmmnnplanmmnn-
mmnn -
strategy:mmnnthoughtful,mmnndeliberatemmnnplanmmnnofmmnnaction;mmnnchoosesmmnntommnnbemmnnclearmmnnaboutmmnnthemm
nn company's mmnndirection mmnn inmmnn relationmmnntommnnwhatmmnnismmnn happeningmmnn inmmnnammnndynamicmmnnenvironme
nt;mmnnanswersmmnnthemmnnquestionmmnn"how?"mmnnasmmnninmmnnhowmmnnwillmmnnwemmnnachievemmnnourmmnnaimmmnnofmmnnc
reatingmmnnandmmnnnurturingmmnnammnnsuccessfulmmnninsurancemmnncompanymmnn
-
strategicmmnnplanning:mmnnthemmnnprocessmmnnusedmmnntommnncreatemmnnthemmnnstrategicmmnnplan;mmnnrunsmmnnanmmnnER
Mmmnnanalysis,mmnnwhichmmnndeterminesmmnnriskmmnnandmmnnopportunities;mmnnconductsmmnnammnnSWOTmmnnanalysism
mnn andmmnn helpsmmnn answermmnn thesemmnn questions--
mmnn wheremmnnaremmnn wemmnn now?mmnn wheremmnn aremmnn wemmnn going?mmnn how mmnn willmmnn wemmnn getmmnn there?mmnn
-
strategicmmnnplan:mmnnthemmnnformulatedmmnnroadmapmmnnthatmmnndescribesmmnnhowmmnnthemmnncompanymmnnexecut
esmmnnitsmmnnchosenmmnnstrategy;mmnnprovidesmmnnanswersmmnnfrommmnninitialmmnnSWOT;mmnnincludesmmnnvalues,mmnnvis
ion,mmnnandmmnnmissionmmnnstatements
whatmmnnaremmnnthemmnnquestionsmmnnthemmnnEMTmmnnmustmmnnanswersmmnnbeforemmnnitmmnnstartsmmnnthemmnnstrategicm
mnn planningmmnn process?mmnnAndmmnn whatmmnn sourcesmmnn of mmnninfommnn willmmnnbemmnn needed mmnn tommnn answermmnn thes
emmnnquestions?mmnn-
mmnn Threemmnn questions:mmnn Whatmmnnaremmnnwemmnnnow?mmnn Wheremmnn aremmnn wemmnn going?mmnn Howmmnn willmmnnwemmn
n getmmnn there?mmnn
SourcesmmnnofmmnnInfo:mmnnOrganizationalmmnnvalues,mmnnmarketmmnntrends,mmnnregulatorymmnnguidelines,mmnncompe
titivemmnnanalysis,mmnnriskmmnnappetite
Whatmmnntoolsmmnncanmmnnexecutivemmnnmanagementmmnnteammmnnusemmnntommnnidentifymmnnmarketplacemmnnreadine
ssmmnnandmmnnvaluemmnnpropositionsmmnntommnndeterminemmnncapitalmmnnstructure,mmnnsurplusmmnnrequirements,mmnna
ndmmnninvestmentmmnnsources?mmnnthinkmmnnmemorymmnnaidmmnnstrategicmmnnmgmtmmnnFIEmmnn-
mmnn strategy mmnn formulation, mmnn strategy mmnn implementation, mmnn strategy mmnn evaluation
identifymmnnandmmnndescribemmnnthemmnnprimarymmnncompanymmnnstructuresmmnnandmmnncharacteristicsmmnn-
mmnn 1. mmnnstockmmnninsurancemmnncompany:mmnnownedmmnn bymmnn stockholders mmnn (investors), mmnnprimary mmnn objecti
vemmnnismmnnprofit,mmnneasemmnnof mmnncapitalization,mmnnmergersmmnnandmmnnacquisitionsmmnneasier,mmnnbrandingmmnnism
mnn easier, mmnn moremmnn pressuremmnn onmmnn toplinemmnn growthmmnn
,2.mmnnmutualmmnninsurancemmnncompany:mmnnownedmmnnbymmnnpolicyholders,mmnnprovidesmmnncoveragemmnnatmmnnormm
nn nearmmnn themmnncostmmnnof mmnndoingmmnnbusiness, mmnn profitsmmnnusedmmnntommnnpay mmnndividendsmmnnormmnn usedmmnn to
mmnn reducemmnnfuturemmnnpremiums, mmnn focusmmnn ismmnn onmmnn bottommmnn linemmnn results,mmnn lessmmnn pressuremmnn onmmn
n day-to-
daymmnnresults,mmnnusuallymmnnverymmnnstable,mmnnexpansionmmnnmoremmnndifficultmmnnbecausemmnnsurplusmmnnmustmmn
n bemmnn builtmmnn overmmnn time, mmnn mergersmmnn andmmnn acquisitions mmnn moremmnn difficultmmnn
3.mmnnreciprocalmmnninsurancemmnncompany:mmnninterinsurancemmnnexchange-
mmnn individuals mmnnormmnn organizations mmnnjoinedmmnntogether,mmnnsubscribers mmnn insuremmnnonemmnn another, mmnnless
mmnn pressuremmnn onmmnn profits mmnnbecausemmnn they mmnn operatemmnnclosemmnntommnnthemmnn costmmnn ofmmnn doingmmnn busin
ess,mmnneasiermmnntommnncapitalize,mmnnusuallymmnnoffermmnnsinglemmnnlinemmnnof mmnnbusiness,mmnnsubscribersmmnnmakem
mnn premiummmnndeposits,mmnn managedmmnn bymmnn anmmnnattorney mmnninmmnnfact, mmnn statemmnn insurancemmnnregulationm
mnn may mmnn bemmnn lessmmnn strict, mmnn difficultmmnn tommnn raisemmnn additionalmmnn capitalmmnn
4.mmnnhybridmmnnstructures:mmnnusemmnnof mmnnholdingmmnncompaniesmmnntommnnownmmnnandmmnnoperatemmnndifferentmmn
n company mmnn structures,mmnn canmmnnbemmnnmademmnn upmmnn of mmnn stock, mmnn mutual, mmnn reciprocal, mmnn andmmnn othermm
nn company mmnn structures
whatmmnnaremmnnthemmnntwommnnapproachesmmnnthemmnnleadmmnntommnnthemmnnconstructionmmnnofmmnnthemmnncompany's
mmnn culture, mmnn describemmnn eachmmnn - mmnn 1. mmnn passivemmnn approach-
mmnn culturemmnncreatedmmnnovermmnntime. mmnnemployees mmnnobservemmnnbehaviormmnnandmmnnvaluesmmnn of mmnn mgmtmm
nn andmmnnfellow mmnnemployees mmnnfunctioningmmnn inmmnnself mmnn protectivemmnnmode. mmnnfew mmnn ormmnnnommnn standar
dsmmnnregardingmmnnworkmmnnbehavior;mmnnhighermmnnlevelsmmnnofmmnninstabilitymmnnandmmnninconsistency, mmnnturnov
ermmnnhigh,mmnnlowmmnnjobmmnnsatisfactionmmnn
2.mmnnactivemmnnapproach-
mmnn deliberatemmnn culturemmnn creation,mmnn leadership mmnn modelsmmnn behaviors mmnnthatmmnn createmmnn themmnndesired
mmnn culture, mmnnsetmmnn stagemmnn formmnnsuccess mmnn by mmnn establishingmmnn solidmmnnfoundation, mmnnpositivemmnn employ
eemmnnengagement,mmnncustomermmnnretention,mmnngrowthmmnntargetsmmnnbecomemmnnmoremmnninmmnnsync
describemmnnthemmnndistinctmmnnpurposemmnnof mmnneachmmnnkindmmnnofmmnnstatement:mmnnvalues,mmnnvision,mmnnandmmnn
missionmmnn-mmnn-
valuesmmnnstatement:mmnnammnnstatementmmnnofmmnncommonlymmnnheld,mmnncoremmnnvalues,mmnnthatmmnndefinemmnnthem
mnn whommnn ofmmnn themmnnorganization. mmnnitmmnnoftenmmnnismmnnreferredmmnntommnn asmmnncompany's mmnncodemmnn of mmnn co
nduct;mmnndescribesmmnnthemmnncentralmmnntheme,mmnnormmnntopmmnnpriorities,mmnnofmmnnthemmnnorganization'smmnncult
uremmnn"who"mmnnof mmnnthemmnnorganization
,-
visionmmnnstatement:mmnnthemmnnlightmmnnthatmmnnguidesmmnnthemmnncompanymmnntommnnitsmmnnhopesmmnnandmmnnambiti
onsmmnnformmnnthemmnnfuture;mmnnaremmnnthemmnnfoundationmmnnformmnnthemmnndevelopmentmmnnandmmnnimplementatio
nmmnnofmmnnammnnlong-
termmmnnstrategicmmnnplanmmnn"whatmmnndommnnwemmnnwantmmnntommnnbemmnnwhenmmnnwemmnngrowmmnnup"
-
missionmmnnstatement:mmnnshortmmnnbutmmnnpowerfulmmnnstatementmmnnregardingmmnnthemmnnreasonmmnnanmmnnorgani
zationmmnnexists;mmnnitmmnnismmnnthemmnnwhymmnnstatementmmnnthatmmnnstatesmmnnammnncompany'smmnncoremmnnpurposemm
nn andmmnnoverallmmnn goal;mmnnitmmnngenerally mmnndealsmmnnwithmmnnthemmnn heremmnn andmmnn now;mmnnidentifies mmnn ammnnco
mpany'smmnnoperationalmmnngoal,mmnnmeaningmmnnthemmnnproductsmmnnitmmnnprovides,mmnnthemmnnmarket(s) mmnnitmmnns
ervesmmnnandmmnngeographicalmmnnterritories;mmnnwhatmmnnthemmnnorganizationmmnnneedsmmnntommnndommnninmmnnthemmnn
momentmmnntommnnachievemmnnvision;mmnn"why"
Whatmmnnaremmnnthemmnn3mmnndutiesmmnnofmmnnthemmnnboardmmnnof mmnndirectorsmmnn-mmnndutymmnnofmmnncare--
mmnn mustmmnnmakemmnnprudentmmnn decisions mmnnusingmmnn duemmnn diligence, mmnngatheringmmnn allmmnn relevantmmnnfactsm
mnn beforemmnn makingmmnn decisions mmnn
dutymmnnof mmnnloyalty--
mmnn keepmmnn interestmmnnofmmnnthemmnn organization mmnn themmnnprimary mmnn focus, mmnn may mmnn includemmnn disclosuremmnn
ofmmnnconflictsmmnnof mmnninterest
dutymmnnof mmnnobedience--
mmnn mustmmnnbemmnn carefulmmnntommnn follow mmnnthemmnn organization's mmnn bylaws, mmnn statedmmnnpurpose, mmnn andmmnn ap
plicablemmnnlaws
whatmmnnaremmnntypicalmmnnboardmmnncommitteesmmnn-mmnnauditmmnncommittee
nominatingmmnncommittee
governancemmnncommittee
financemmnncommittee
typicalmmnnexecutivemmnnpositionsmmnnyoummnnfindmmnninmmnnthemmnninsurancemmnncompanymmnn-
mmnn CEO,mmnnCFO, mmnnPresident,mmnn VP mmnn Claims, mmnn VP mmnn salesmmnnandmmnnmarketing, mmnnChief mmnnUnderwritingmmn
n Officer, mmnn Chief mmnn Claimsmmnn Officer
, Whatmmnnismmnnthemmnnrelationshipmmnnbetweenmmnnammnncompany'smmnnriskmmnntolerancemmnnandmmnnriskmmnnappetite
mmnn andmmnn themmnn EMT'smmnn decision-makingmmnn process?mmnn -
mmnn Risk mmnnTolerance:mmnn Themmnn maximummmnn amountmmnnof mmnnrisk mmnn ammnnpersonmmnnormmnn organization mmnn ismmnn
willingmmnntommnnassumemmnn
RiskmmnnAppetite:mmnnThemmnnmaximummmnnamountmmnnofmmnnriskmmnnthemmnnorganizationmmnnismmnnwillingmmnntommnnac
ceptmmnnwhilemmnnstrivingmmnntommnnmeetmmnnitsmmnnstrategicmmnnandmmnntacticalmmnnplans
whatmmnnbusinessmmnndecisionsmmnnresultmmnnfrommmnnriskmmnnappetitemmnn-mmnn-singlemmnnlinemmnnormmnnmultiline--
mmnn aremmnn yoummnngoingmmnntommnn focusmmnn onmmnn onemmnnlinemmnn of mmnn business mmnnandmmnnbecomemmnn andmmnn expert
mmnn andmmnn risk mmnnlosingmmnn themmnnmarket, mmnn ormmnnchoosemmnn tommnn havemmnn balancemmnn itmmnn needsmmnntommnn survi
vemmnnduringmmnnmarketmmnnchangesmmnnasmmnnitmmnnismmnnraremmnntwommnnormmnnmoremmnnlinesmmnnofmmnninsurancemmnnwi
llmmnnbemmnnaffectedmmnninmmnnanymmnngivenmmnnmarketmmnncycle,mmnnexpensemmnnmaymmnnbemmnngreatermmnnasmmnnmaymmn
n needmmnn multiplemmnn uw mmnn teamsmmnn formmnn examplemmnn
-specialistmmnnormmnngeneralist--
mmnn focusmmnn only mmnnonmmnnfew mmnn types mmnn of mmnnrisk mmnnormmnn writemmnnallmmnn differentmmnn types mmnn of mmnn businesse
smmnnrathermmnnthanmmnnfocusingmmnnonmmnnspecificmmnntypesmmnn
-geographicmmnnfootprint--
mmnn wheremmnndommnnyoummnn wantmmnntommnnwrite, mmnn ammnnsinglemmnn statemmnnormmnn multiplemmnn statesmmnn wheremmnnitmm
nn wantsmmnn tommnn sellmmnn ormmnn willmmnn itmmnn startmmnn inmmnn onemmnn statemmnn andmmnn expand mmnn overmmnn timemmnn
-receptionmmnnbymmnndistribution--
mmnn how mmnnreceptivemmnnaremmnnagentsmmnninmmnn themmnnareammnntommnn new mmnn companies, mmnnconsidermmnn regulator
ymmnnandmmnnjudicialmmnnenvironmentsmmnn
-barriermmnntommnncompetition--
mmnn success mmnn inmmnn onemmnnstatemmnndoesmmnnnotmmnnguaranteemmnnsuccess mmnn inmmnnanother, mmnn competition mmnn ca
nmmnnbemmnntoughermmnninmmnnsomemmnnmarketsmmnnthanmmnnothersmmnn
-spreadmmnnofmmnnrisk--
mmnn companies mmnn writemmnnpolicies mmnn inmmnn allmmnnareasmmnn of mmnn ammnnsinglemmnnstatemmnnormmnn inmmnn multiplemmnn stat
es,mmnnthemmnnlargermmnnthemmnnareammnninmmnnwhichmmnnammnncompanymmnnwrites,mmnnthemmnngreatermmnnthemmnnspreadm
mnn whichmmnnhelpsmmnn minimizemmnn exposuremmnn tommnn ammnn catmmnneventmmnnthatmmnncouldmmnn affectmmnn majority mmnnof
mmnn theirmmnn policies mmnn atmmnn samemmnn timemmnn
