1 / 171

Agency Operations

Agency Operations. Learning Objectives. We will review the learning objectives at the beginning of the section in which they are found. Section 1: The Insurance Agency. The Insurance Agency.

dinh
Download Presentation

Agency Operations

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Agency Operations

  2. Learning Objectives • We will review the learning objectives at the beginning of the section in which they are found

  3. Section 1: The Insurance Agency

  4. The Insurance Agency • Explain the different factors that affect how an agency distributes its products and provides customer service • Differentiate between an agent and a broker • Explain the standard of care an agent owes to its insurance companies • Explain the standard of care an agent owes to its customers • Identify the potential stakeholders of the insurance agency

  5. The Insurance Agency • The Primary Function of An Insurance Agency is to Sell Insurance Coverage and Provide Other Fee-Based Services • Primarily A Sales Oriented Business • But Service Driven as Well

  6. The Insurance Agency LO • Distribution is Affected By: • Number of Employees • Single or Multiple Locations • Local, Regional or National or International Operations • Area(s) of Specialization (if any) • Agency Management System(s) Used • Use of Service Centers

  7. The Insurance Agency • Sources of Income/Revenue • Commission • New and Renewal • Personal Lines, Commercial Lines, Life, Health & Disability, Employee Benefits • Fee-Based Services • Profit Sharing Bonuses • Investment Income

  8. The Insurance Agency • Overview of Positions Within the Agency • Producer/Agent • Broker • Customer Service Representative • Other

  9. The Insurance Agency LO • Positions Within the Agency • Producer/Agent • Required to have a license, issued by the department of insurance, which authorizes the agent to transact insurance • Identifying prospects, making sales calls, presenting solutions, securing the buying decision, collecting premium, and binding of coverage

  10. The Insurance Agency LO • Producer/Agent • Acts on behalf of the insurance company • What the agent knows, the company knows

  11. The Insurance Agency LO • Positions Within the Agency • Broker • Required to have a broker’s license issued by the department of insurance  • Many of the responsibilities are identical to those of an agent except a broker does not usually have binding authority • A broker acts on behalf of the buyer/customer

  12. The Insurance Agency • Positions Within the Agency • CSR • Customer Service Agent (CSA), Account Representative, Account Executive or Account Manager • Responsible for providing information, advice, and service to customers during and after the insurance transaction • Responsible for the day-to-day operation of an agency

  13. The Insurance Agency • CSR • Responsibilities may also include sales such as cross-selling and account rounding • May be required to be licensed as an agent (or producer) as duties frequently fall under “transacting” insurance • Size of the agency will dictate level of responsibility and specialization

  14. The Insurance Agency • Positions Within the Agency • Other • Accounting • Administration/Management • Claims • Loss control • Risk management

  15. Licensing Requirements • Agent/Producer • Resident • License to transact insurance in the state where the agent resides • Non-resident • License to transact insurance in a state or jurisdiction in addition to the one in which the agent lives

  16. Licensing Requirements • Agent/Producer • Prelicense Education • Education that must be completed before a person can take the agent’s examination • Continuing Education • Education that must be completed in order to renew an agent’s license

  17. The Insurance Agency LO • Standard of Care Owed To Insurance Companies • Loyalty • Good Faith • Reasonable Care • Contractual Duties

  18. The Insurance Agency LO • Standard of Care Owed To Customers • Adequate Coverage • Proper Coverage • Coverage Placed in Their Best Interest • Prompt Communication • Coverage Placed With a Financially Sound Insurance Company

  19. Resources • The National Alliance • IRMI • Insurance Journal • Agent and Broker • Rough Notes • National Underwriter Company • National Association of Ins. Commissioners • National Association of Insurance Women Knowledge Is Power

  20. Stakeholder People who have the potential to be affected by any action taken by an organization. Any group or individual who is affected by achievement of a firm's objectives

  21. Stakeholders LO • Agency Owners • Board of Directors • Managers and Employees • Customers • Insurers • Vendors • Government • Industry Associations

  22. Section 2: The Insurance Marketplace

  23. Learning Objectives • Explain the regulation of insurance companies • Explain the differences between admitted and non-admitted insurance companies • Explain the characteristics of an excess and surplus lines agent/broker

  24. Learning Objectives 4. Explain the importance of the financial status of a company 5. Explain the differences between treaty and facultative reinsurance and the importance of reinsurance to the agency 6. Identify and describe the other markets including Lloyd’s of London, excess and surplus lines, and government programs/pools

  25. The Insurance Marketplace LO • Insurance Companies • Regulated at state level by Insurance Commissioner, Director of Insurance, etc. • The primary purpose of regulation is to protect the consumer

  26. The Insurance Marketplace • How Insurance Companies Are Formed • Stock company • Owned by the stockholders • Objective is profit for the stockholders • Mutual Company • Owned by the policyholders • Goal is to provide insurance at or near the actual cost of doing business

  27. The Insurance Marketplace LO • Admitted • Authorized and licensed to do business in the state

  28. The Insurance Marketplace LO • Non-admitted • Accessed through excess or surplus lines broker • Coverage cannot be placed with a non-admitted carrier unless a due diligence effort has been made to place coverage in an admitted market • Not protected by the Guaranty Fund

  29. The Insurance Marketplace LO • Non-admitted is not business as usual • Binding authority • Minimum premium • Minimum earned premium • One-way audits • Non-standard forms

  30. The Insurance Marketplace LO • Excess & Surplus Lines Agent/Broker • Places coverage with non-admitted insurer on behalf of the agent • Appointed by non-admitted insurer to • Solicit sales from agencies • Write insurance • Collect premium • Collect surplus premium taxes

  31. The Insurance Marketplace LO • Excess & Surplus Lines Agent/Broker • Monitors the financial condition of the insurance company (Insurance Departments have that responsibility for admitted companies) • Does not usually have binding authority

  32. The Insurance Marketplace • Regional or National • Where does the insurance company do business? • Are they familiar with the issues specific to your geographic area?

  33. The Insurance Marketplace LO • Financial Rating • Important to monitor so that the consumer is not negatively affected by the company’s inability to meet its financial obligations such as paying claims and returning unearned premiums • Financial data is filed with the state insurance departments annually

  34. The Insurance Marketplace LO • Financial Rating • Rating organizations can also provide financial information about an insurance company • Resources • A.M. Best • Dun & Bradstreet • Standard & Poors • NAIC

  35. The Insurance Marketplace LO • Reinsurance Company • The insurance company’s “insurance company” Reinsurance A process involving the transfer of risk from one insurer to another insurer

  36. The Insurance Marketplace LO • Reinsurance Company • Treaty Reinsurance • The ceding company agrees to cede certain classes of business to the reinsurer as described in the treaty • The reinsurer agrees to accept ALL business qualifying under the treaty

  37. Treaty Reinsurance Example • ABC Insurance Company has a treaty with XYZ Reinsurance Company • According to their treaty, ABC is required to “cede” to XYZ (reinsure) liability limits over and above $1,000,000 on every personal auto policy ABC writes. ABC pays a portion of the premium to XYZ for this transfer of risk.

  38. The Insurance Marketplace LO • Reinsurance Company • Facultative Reinsurance • Each exposure that the ceding company wants to reinsure is offered to the reinsurer on an individual basis • It is individually underwritten and individually priced

  39. The Insurance Marketplace LO • Importance of Reinsurance to the Agency • The treaty an insurance company has with its reinsurer is a factor that must be considered when an underwriter is evaluating a risk for acceptance and pricing.

  40. The Insurance Marketplace LO • Importance of Reinsurance to the Agency • Personal lines can be affected by the limitations (coverage limits, values in unprotected locations, etc.) as the insurance company may be unable to provide coverage because reinsurance would not be in place. Reinsurance may be the reason for the limitation of binding authority.

  41. The Insurance Marketplace LO • Importance of Reinsurance to the Agency • Commercial lines can be affected by both coverage limitations and pricing. If reinsurance is required on a risk that falls outside of the scope of the treaty, pricing and coverage availability can be affected. The underwriter must include a premium charge for the reinsurance.

  42. The Insurance Marketplace LO • Lloyd’s of London • Market for difficult to insure risks as well as unique or unusual risks • How it works

  43. The Insurance Marketplace LO • Managing General Agent (MGA) • Wholesale intermediary • Represents one or more insurers • Accepts business on behalf of his/her principal within mutually agreed guidelines • Authority to appoint retail agents within a specific geographic area

  44. Insurer A Insurer C Insurer B Managing General Agent Agencies Insureds

  45. The Insurance Marketplace LO • Government Ins. Programs/Pools • Private sector may avoid writing risks that fall outside of their underwriting criteria or are catastrophic in nature • In response, the government may establish insurance programs or pools as a way to make insurance available

  46. The Insurance Marketplace —Caution— Agents do not typically have binding authority for Government Insurance Programs and Pools Important to understand underwriting criteria, binding authority (if any), and problems associated with incomplete or incorrect applications

  47. The Insurance Marketplace LO • Auto Assigned Risk • Fair Access to Ins.Requirements (FAIR) • Wind & Hail Pools • National Flood Insurance Program • Workers’ Compensation Assigned Risk • Federal Crop Insurance (FCIC)

  48. Section 3: Basics of Risk Management

  49. Learning Objectives • Identify and explain the five steps in the risk management process • Identify and describe the four major classes of exposure • Identify and describe the methods used to identify exposure to loss • Given a specific situation, determine the risk control technique to apply

  50. Risk Management The purpose of risk management is to protect the customer’s assets through the identification and analysis of exposures, controlling the exposures, financing of losses with internal and/or external funds, and the implementation and monitoring of the risk management process.

More Related