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CIC - Agency Management Exam 2023
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CIC - Agency Management Exam 2023 Budget Considerations for growing an agency and doing a needs assessment - ANSWER -the specific talents and skills employees require -an awareness of gaps, deficiencies, and surpluses within and across departments -a determination of how many employees the agency can afford to hire -the best time for employees to join the agency An agency uses its value statement to accomplish several goals - ANSWER 1. Communicate the agency's core principles to shape its direction and organi zational goals 2. Focus on aspirations and behavioral issues that matter most to th e agency's leadership 3. Define the standards of conduct and expectations for all ag ency members 4. Communicate these statements orally, written, and electronic form Value statement answers the questions - ANSWER Who we are? What we are? How we do it? An example of a value statement - ANSWER The smith Agency values help ing local businesses succeed An agency's vision statement should - ANSWER 1. Communicate a clear picture of what an agency is trying to achieve 2. Identifies characteristics that: -reflect the long-range goals of the agency's policyholders -project the view of what the agency aspires to be -guide the agency's strategic development An agency's vision statement answers - ANSWER Where do we want t o go? An example of a vision statement - ANSWER The vision of the Smith Ag ency is to be a fully employee-owned agency that is recognized as the premier commerci al lines agency in the region An agency's mission statement should - ANSWER -provide a clear st atement of an agency's purpose and focus -Identify characteristics that are broadly stated in terms of servi ce, income, and profit -establish clear growth goals serving its key stakeholders, clients, and employees An example of a mission statement - ANSWER ABC Agency will provide q uality personal and commercial insurance products to the clients located within our tra de area to help them achieve their financial security goals Several considerations that contribute to establishing an agency's goals - ANSWER -Target market niches -Agency personnel and productivity -Market territory -Multiple locations -Marketing and Sales Long-Range Planning - ANSWER occurs over 3 to 5 years -establishes purpose, continuity, and direction -focuses on broad goals that will remain relevant years later -provides a broad picture of where an agency is headed Short-Range Planning - ANSWER Usually extends over a 12 month period -more specific and provides details that fit within the framewor k of the long-term plan -Involves the production of detailed action plans that organize and p rioritize action steps -Communicate roles and responsibilities -offers guidance -provides an agency's daily/weekly/monthly action agendas S-M-A-R- T - ANSWER Specific - Measurable - Attainable - Realistic - Tim ely An agency's 5 growth stages - ANSWER 1. Start- Up 2. Development & Growth 3. Success 4. Expansion 5. Maturity Start-up companies - ANSWER owner or management team handles everything -the agency is only beginning to establish its client base, product ion, and service is unstable Development & Growth - ANSWER -an increased number of clients/accou nt -make efforts to balance revenue and expenses -owner/management team remains involved in daily operations Success - ANSWER -agency is profitable and follows well-executed procedure s -owner/management team delegates some sales and service activities Expansion - ANSWER -an agency grows rapidly and targets new marketin g territories Maturity - ANSWER -agency is fully developed and uses sophisticated syste ms -emphasis on collaboration and building professional integrity -CEO/management team focuses on strategic goals, planning, human resour ce development, and support systems Factors that asses an agency's financial health - ANSWER 1. Profitabilit y 2. Accounts Receivable - able to collect payments in a timely ma nner 3. Retention Ratio 4. Average commissions - Producer compensation structure - who owns the book of business 5. Competencies of personnel - company markets 6. Brand - positive or negative image in the community Tools to measure agency financial health - ANSWER 1. Budget 2. Income Statement 3. Balance Sheet Budget allows - ANSWER an owner/management team to compare monthly r esults to projected results An income statement shows - ANSWER an agency's revenues and expenses over a period of time and can depict activity over a month, quarter, or year Four income sources for an agency are: - ANSWER 1. Commissions 2. Fee Income 3. Interest/Investment income - interest on agency investments & prem ium trust account 4. Contingency Income - Tracking profit-sharing, premium requir ements, and monitoring losses and loss reserves Examples of Compensation Expenses - ANSWER 1. Executive Compensation 2. Sales salaries and commissions 3. Staff salaries 4. Employee Benefits 5. Payroll Taxes 6. Pension and Profit Sharing Examples of Selling Expenses - ANSWER 1. Travel and Entertainment 2. Advertising and Promotion 3. Automobile Examples of Administrative Expenses - ANSWER 1. Rent, Utilities, leases, a nd postage 2. Accounting, legal, and other professional services 3. Automation and data processing 4. Education, licenses, and membership fees 5. Marketing/Advertising Determining Managing Expenses requires: - ANSWER 1. Conducting a situational analysisThe benefits of buying summaries with Stuvia:
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