Exam (elaborations)
C16 - CH2 - Insurance Company Structure
- Institution
- Captains Career Course Module 5 Post Test 2
C16 - CH2 - Insurance Company Structure
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C16 - CH2 - Insurance Company StructureDefine Subscribed capital - CORRECT ANSWER-The amount of stock sold by a
corporation
Define paid-up capital - CORRECT ANSWER-Represents that part of subscribed
capital that has been paid in full by shareholders
Define Mutual Insurer (MIDTERM?) - CORRECT ANSWER-A form of
cooperative enterprise owned by its *policyholders* (also known as members). It
operates on a *premium asset plan* or *premium note plan*.
Define corporate governance - CORRECT ANSWER-The term corporate
governance *signifies how a corporation directs itself and how control of this
process is managed*. Corporate governance encompasses the process,
structure, and information used to manage a company and the means by which
the board of directors and senior management are held accountable for their
actions.
Management Structure (*MIDTERM*) - explain the difference between pyramid
and flat network structure - CORRECT ANSWER-*Pyramid / hierarchal* -
traditional structure
- vertical decision making
- results in internally focused top-down governance
*Flat* are more common in changing economy recognizes information and
knowledge as wealth-creating assets in addition to labour and capital.
- Distributed decision making
- Both internally and externally distributed governance
Discuss the term *Degree of Hierarchy*. Features of it, and pros and cons
(*MIDTERM*) - CORRECT ANSWER-- There is always someone in charge and
a distribution of authority in diminishing degrees between members in a group.
- Varies from strongly hierarchal - like a ladder, lines of reporting going up, and
lines of communication going down - to slightly hierarchical, almost flat,
, employees have authority to do majority of their responsibilities without seeking
approval of sr.mgmt.
- Flatter corp structure can be more efficient as it limits the layers of mgmt issues
must pass before decision can be implemented. Flatter structure can be
undesirable as it limits advancement opportunities
Define *span-of-control* (MIDTERM) - CORRECT ANSWER-The span of control
*managerial principle* asserts that *limiting the number of employees who report
to the same manager or supervisor improves organizational performance*.
Discuss *Degree of Centralization* (*MIDTERM*) - CORRECT ANSWER--
Companies with business in a number of territories can have offices located in
major areas it operates. It is also possible to have a centralized operation where
much of the business is conducted in one location.
- The *degree of centralization is related to its degree of hierarchy*; more
hierarchal organizations also tend to be more centralized.
- *Decentralized company*'s branch operations emphasize underwriting, claims,
marketing, sales, and customer service.
- *Centralized companies* restrict underwriting and claims authority, policy
issuance, finance, and accounting to head office, *retaining only sales and
customer service at branches*.
- Branches can be formed by geography or by product line.
Discuss *Multiple Companies* (*MIDTERM*) - CORRECT ANSWER-- Multiple
companies under a single corp structure provides flexibility in areas like
distribution, products, underwriting, and rating.
- Allows an org to use brokers and direct sales - access broader policy base
- Flexibility in products offered, types of risks targeted. Different rating plans and
underwriting rules.
- Can acquire a shell company, or build own new one.
Define shell company - CORRECT ANSWER-A company with the licenses
needed to operate but not much else, or an existing insurer with a book of viable,
attractive business that fits the overall strategy for the company's mission.
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