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FIN 321 Principles of Risk Management and Insurance Insurance Production

FIN 321 Principles of Risk Management and Insurance Insurance Production. Russ Rucker, AAI, CPCU Rucker, Billups & Fowler Inc. Huntington, WV. Topics of Discussion. What is insurance production? Types of Insurance Marketing Systems What is the role of a producer? Risk Management Process

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FIN 321 Principles of Risk Management and Insurance Insurance Production

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  1. FIN 321Principles of Risk Management and InsuranceInsurance Production Russ Rucker, AAI, CPCU Rucker, Billups& Fowler Inc. Huntington, WV

  2. Topics of Discussion • What is insurance production? • Types of Insurance Marketing Systems • What is the role of a producer? • Risk Management Process • Gathering of Information-Data Sheets and Checklists • Case Studies

  3. What is Insurance Production? • Production refers to the sales and marketing activities of insurers • Agents are often referred to as producers • Life Insurers have an agency or sales department • Property and Liability insurers have marketing departments • An agent should be a competent professional with a high degree of knowledge in a particular area of insurance and who also places the needs of his or her clients first

  4. Types of Insurance Marketing Systems • Independent Agency- a business firm that usually represents several unrelated insurers • Agents are paid a commission which will vary by the line or type of insurance. The amount of business can result in additional compensation to the agent • Agency owns the expiration or renewal rights to the business

  5. Types of Insurance Marketing Systems • Exclusive Agency System- the agent represents only one insurer or group of insurers under common ownership • Agents do not usually own the expiration or renewal rights to the policies • Agents are generally paid a lower commission rate on renewal business than on new business

  6. Types of Insurance Marketing Systems • Direct Writer- an insurer in which the salesperson is an employee of the insurer, not an independent contractor. Employees are usually compensated on a “salary plus” arrangement

  7. Types of Insurance Marketing Systems • Direct Response- the insurer sells directly to the consumer by television or some other media Usually used to sell personal lines of insurance • Multiple Distribution Systems- some insurers use variations of all or some of the above systems

  8. What is the role of a producer?Risk Management Process • Identify loss exposures • Measure and analyze loss exposures • Select the appropriate combination of techniques for treating the loss exposures • Implement and monitor the risk management process

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