CPCU 520
Value Chain ANS: It's the interconnected activities in a business through which a product or service is
produced and sold. Used for analyzing the input activities a single company performs to create
marketable outputs for customers and for identifying ways to maximize its competitive advantage.
Insurance Value Chain Model ANS: Marketing and distribution, underwriting, and claims.
Supply Chain ANS: a network of connections between each of the entities (namely organizations) that
are used throughout the process of bringing a product or service to market—from suppliers to end
users. Used for identifying how reliant a business is on any point in the supply chain and any potential
weak links that could disrupt business.
Cost Leadership ANS: A business-level strategy through which a company seeks cost efficiencies in all
operational areas.
Marketing and Distribution ANS: involves determining what products customers want and need,
advertising those products (communicating their value to customers), and delivering them to customers.
Underwriting ANS: The process of selecting insureds, pricing coverage, determining insurance policy
terms and conditions, and then monitoring the underwriting decisions made. To help the insurer write
and maintain profitable business. This requires selecting insureds whose covered losses are not likely to
exceed the number of losses the insurer anticipated when it priced the insureds' coverage.
Loss Ratio ANS: A ratio that measures losses and loss adjustment expenses against earned premiums
and that reflects the percentage of premiums being consumed by losses.
Claims ANS: This function is staffed by employees who are trained to evaluate and settle claims and to
negotiate or litigate the settlement of claims. Critical link between an insurer and its customers.
,Risk Control ANS: help prevent losses and reduce the effects of losses that can't be prevented.
Conducting physical surveys, performing risk analysis and improvement, and developing safety
management programs.
Actuarial ANS: include calculating insurance rates, developing rating plans, estimating loss reserves, and
providing predictive models. Also analyze an insurer's financial security and coordinate with accounting
and finance personnel to develop reports for regulators.
IT ANS: Provides the technological backbone that supports an insurer's communications, operations,
marketing, underwriting, investing, and claims handling.
Premium Audit ANS: Methodical examination of a policyholder's operations, records, and books of
account to determine the actual exposure units and premium for insurance coverages already provided.
1: Assessing opportunities
2: Defining a product, underlying support, and pricing
3: creating a business forecast
4: complying with regulatory requirements
5: selecting distribution systems and channels
6: introducing the product ANS: Product Development Steps
Product Development Steps - 1. Assessing opportunities ANS: · Monitor market
· Identify opportunity
· Relate opportunity to business strategy
· Develop specifications
· Secure senior management approval to proceed
, Product Development Steps - 2. Defining a product, underlying support, and pricing ANS: · Specify the
new product (or service)
· Identify what's needed to support the new offering
· Develop coverage forms (for new policies)
· Develop underwriting and claims guidelines (for new policies)
· Develop pricing structure
· Obtain approval from functional area managers to proceed.
Product Development Steps - 3. creating a business forecast ANS: · Identify performance metrics
· Set performance expectations
· Develop a forecast
· Obtain senior management to proceed
Product Development Steps - 4. complying with regulatory requirements ANS: · File with regulators (for
new insurance products)
· Develop statistical information systems
· Communicate regulatory approval
Product Development Steps - 5. selecting distribution systems and channels ANS: · Select a distribution
system
· Find appropriate producers
· Select distribution channels
· Develop advertising and sales promotional information
· Develop sales and customer training
· Create a rollout strategy
Product Development Steps - 6. introducing the product ANS: · Implement sales training and promotion
Value Chain ANS: It's the interconnected activities in a business through which a product or service is
produced and sold. Used for analyzing the input activities a single company performs to create
marketable outputs for customers and for identifying ways to maximize its competitive advantage.
Insurance Value Chain Model ANS: Marketing and distribution, underwriting, and claims.
Supply Chain ANS: a network of connections between each of the entities (namely organizations) that
are used throughout the process of bringing a product or service to market—from suppliers to end
users. Used for identifying how reliant a business is on any point in the supply chain and any potential
weak links that could disrupt business.
Cost Leadership ANS: A business-level strategy through which a company seeks cost efficiencies in all
operational areas.
Marketing and Distribution ANS: involves determining what products customers want and need,
advertising those products (communicating their value to customers), and delivering them to customers.
Underwriting ANS: The process of selecting insureds, pricing coverage, determining insurance policy
terms and conditions, and then monitoring the underwriting decisions made. To help the insurer write
and maintain profitable business. This requires selecting insureds whose covered losses are not likely to
exceed the number of losses the insurer anticipated when it priced the insureds' coverage.
Loss Ratio ANS: A ratio that measures losses and loss adjustment expenses against earned premiums
and that reflects the percentage of premiums being consumed by losses.
Claims ANS: This function is staffed by employees who are trained to evaluate and settle claims and to
negotiate or litigate the settlement of claims. Critical link between an insurer and its customers.
,Risk Control ANS: help prevent losses and reduce the effects of losses that can't be prevented.
Conducting physical surveys, performing risk analysis and improvement, and developing safety
management programs.
Actuarial ANS: include calculating insurance rates, developing rating plans, estimating loss reserves, and
providing predictive models. Also analyze an insurer's financial security and coordinate with accounting
and finance personnel to develop reports for regulators.
IT ANS: Provides the technological backbone that supports an insurer's communications, operations,
marketing, underwriting, investing, and claims handling.
Premium Audit ANS: Methodical examination of a policyholder's operations, records, and books of
account to determine the actual exposure units and premium for insurance coverages already provided.
1: Assessing opportunities
2: Defining a product, underlying support, and pricing
3: creating a business forecast
4: complying with regulatory requirements
5: selecting distribution systems and channels
6: introducing the product ANS: Product Development Steps
Product Development Steps - 1. Assessing opportunities ANS: · Monitor market
· Identify opportunity
· Relate opportunity to business strategy
· Develop specifications
· Secure senior management approval to proceed
, Product Development Steps - 2. Defining a product, underlying support, and pricing ANS: · Specify the
new product (or service)
· Identify what's needed to support the new offering
· Develop coverage forms (for new policies)
· Develop underwriting and claims guidelines (for new policies)
· Develop pricing structure
· Obtain approval from functional area managers to proceed.
Product Development Steps - 3. creating a business forecast ANS: · Identify performance metrics
· Set performance expectations
· Develop a forecast
· Obtain senior management to proceed
Product Development Steps - 4. complying with regulatory requirements ANS: · File with regulators (for
new insurance products)
· Develop statistical information systems
· Communicate regulatory approval
Product Development Steps - 5. selecting distribution systems and channels ANS: · Select a distribution
system
· Find appropriate producers
· Select distribution channels
· Develop advertising and sales promotional information
· Develop sales and customer training
· Create a rollout strategy
Product Development Steps - 6. introducing the product ANS: · Implement sales training and promotion
