CAIB 4 Exam QUESTIONS WITH COMPLETE 100% VERIFIED SOLUTIONS 2024/2025, Exams of Business Administration

Download CAIB 4 Exam QUESTIONS WITH COMPLETE 100% VERIFIED SOLUTIONS 2024/2025 and more Exams Business Administration in PDF only on Docsity! CAIB 4 Exam QUESTIONS WITH COMPLETE 100% VERIFIED SOLUTIONS 2024/2025 What are the two approaches to planning? Explain each 1) Top Down Planning - Management provides the mission, strategies, and objectives for the brokerage 2) Bottom Up Planning - Management provides the mission and broad strategies. Leaves the objectives, goals and activities to business units. What are the advantages and disadvantages of top down planning? Advantages: Management feels in control and in charge of decision making. Disadvantages: hard to get buy-in from employees What are the advantages and disadvantages of bottom up planning? Advantages: business units have ownership and buy in. Disadvantages: Management feels less in control, there may be resistance to changes made to the plan by management. Why is Top Down planning not suitable for a small organization. Stifles innovation, slows decisions, managers need to know too much, What are the four characteristics of a plan? 1) Simplicity 2) Practicability 3) Severability 4) Flexibility Explain Simplicity (2 points) The plan should be explainable in simple terms. The plan should be implemented without extensive training while employees continue their day to day operations. Explain Practicability The plan must be realistic Explain severability (2 points) The parts of a plan must be separate and identifiable. Each business unit must see how to apply it to their area Explain flexibility A good plan must allow for modification as it is implemented. Explain the difference between a strategic plan and an action plan Strategic plans are broad and cover 3-5 years. Action plans give specific activities to support SP. They apply to a particular unit and cover 1-3 years, typically one year. How many components of a strategic plan are there? Seven. What are the first three components of a strategic plan? a) Scanning the external environment. b) Scanning the Internal Environment c) Matching strengths and weaknesses to opportunities and threats. Explain "scanning the external environment" and its two sub categories. Scanning the external environment looks at the competitive environment and attempts to identify opportunities and threats. They look at the distant environment and near environments. Explain the distant environment. Factors that are critical to the survival of the brokerage, but over which it has no control. Example: Hard and soft markets. Changes to laws. Technology. Explain the near environment. Factors over which a brokerage does have control. Example: Clients and prospects, market segment targeted, direct competitors. What are the three types of profiling within Near environment scans? Competitor, market, and client profiling. Competitor: Size, financial condition, and location of head office. Market: Total market, market segments where they compete, and the market portion that they serve. Client: Find a clear understanding of the nature and characteristics of a brokerage's clients. Explain SWOT and the needed actions given the four scenarios If there is a weakness where there is a threat - Immediate Attention If there is a weakness where there is an opportunity - Resources should be allocated to capitalize later. If there is a strength where they is a threat - No action needed If there is a strength where there is an opportunity - it should be immediately capitalized on Recite the vision statement Protection of assets by protecting what is near and dear to our clients Recite the value statement Explain why financial strength is important to operating affiliations: It is not enough for the OA to promise some service or another. It must also have allocated the money necessary for the project. What are the three kinds of authority given to an agency by an insurance company: Express authority, implied authority, and apparent authority. What is express authority? Anything legal that the parties agree to, either verbally or in writing. What is implied authority? Acts based on precedent or custom within the industry are accepted by insurance companies. What is apparent authority? Authority that an outsider may think the brokerage has but which it does not have. Discuss ratification Ratification takes place when a broker steps outside their authority to bind a risk and the company, with full knowledge of this misstep, agrees to place coverage under the terms that the broker set, backdated to the day the agreement was made with the client. What are the parts of planning with respect to HR 1) Evaluate existing ability to generate sales and premium growth and determine if the existing employee base is enough to meet the demands. 2) Estimate the HR needs to carry out the strategic plan 3) Lay out the skills the new employees will need, the hiring timetable, and a contingency plan. What are the three phases in Selecting employees in and HR plan, Recruitment, Screening and interviewing, and hiring. Explain recruitment The process of building awareness of the position, searching for applicants, and attracting qualified people to apply. Explain screening and interviewing This is the process of deciding which candidates are best qualified and who should be offered the job. Explain Hiring Giving and formal letter of offer and obtaining a non-piracy agreement. Why would brokers wish to recruit from within their organization Cheaper, candidate is a known entity, boosts morale, reduces turnover, minimizes vacancy. What are the steps in the screening process? Application Form, Resume, Employment Interview, testing, reference checks. What are the four elements of a training plan? Quality service training, sales training, product knowledge and service training, leadership training, What is quality service training? QST focusses on problem solving Explain sales training. Sales training focusses on building long terms relationships. Explain product and service knowledge training. Focusses on building technical competence. What are the four areas of leadership training? How to train, how to coach and counsel, how to create and motivating environment, and how to empower employees. What are the six components of leading? Delegating, motivating, communicating, managing conflict, managing change, coaching. What is delegation and why do we do it? Accomplishing goals through the involvement of others. It is done to free up manager time. What is motivating? Motivation comes from within, a manager must tap into the internal needs of an employee. Explain communicating as a leader. It is an interactive exchange of verbal and non-verbal info. Managers must communicate openly and effectively, and it must be two way, non stressful, and respectful. Name four successful strategies for managing employee conflict and explain. 1) Communication skills - Big cause of conflict is a breakdown in communication 2) mutual respect - an environment of communication without interruption, criticism or judgement. 3) interactive problem solving - All parties should participate in finding a solution 4) win-win solutions - Solutions should be sought by which all parties to the dispute would benefit. Name four perceived barriers to change and how to overcome them. 1) Tradition - Emphasize the need to adapt and be flexible in a changing environment. 2) Past Failures - Explain how this change can be successful because we learned from past failures. 3) Lack of time - Put off doing things right today so that we can do them right tomorrow. 4) Unpredictability of the future - The "do-nothing" approach does not take into account the continuing uncertainties that brokerages face. What is the difference between agency billing and direct billing Agency billing comes from the brokerage and is passed to the company. Direct billing is done though the company. What are the advantages and disadvantages of direct billing? Advantages: Collection costs are reduced for both the brokerage, and the insurance company. Admin costs for brokerage are reduced. Disadvantages: Can't use premiums while held, broker lacks control over prep and maintenance of policies, loss of personal contact with clients, inaccessibility to the insurance company's records. What are four factors that contribute to how attractive an insurance company's underwriting practices are? Location of underwriting decisions - Where the decision are made, how many underwriters will you deal with, do they class underwrite? Underwriting guidelines - Are they asking for massive amounts of info every time? Rate levels - are their premiums fair for the services they provide? Competence and continuity of staff - Are their underwriters good. Do they stay in a role long enough to build and capitalize on a relationship, or do they change all the time? Discuss why it is not effective to have multiple company representation. Less premium with each company, a single loss may affect loss ratio drastically, customers don't care if you represent all available outfits. What are two channels for company/broker relations? Formal - Written publications, letters, visits. Informal - cocktail parties, golf games. Q: What are the three phases of marketing? A: Toolkit, Strategy, Culture. Discuss marketing as a toolkit. What are the four Ps? Price, place, product, and promotion If you hae the four Ps in order, the clients will come. Discuss Marketing as a Strategy Strategic about what you're marketing by - Market segmentation, Differentiation, Market Positioning Discuss marketing as Culture. Everything within the company is focussed on building client satisfaction. They want their clients to be retained, and also to recommend the company to others. Explain a product (3 points): Which product lines do we offer, services surrounding core products, the choice of brands to offer. Not just the contract of insurance, it's the services around the product. Explain price Price is the base price of the policy plus credit terms and fees. Explain place: Used to be that the brokerage had to decide where the branch would be and when to be open. Now it should factor in whether or not a call centre is needed and if an online presence is needed. Explain Promotion The communication of a marketing mix. Has many factors. Explain People The employees who interact with clients are a key factor in building a long term relationship. What is positional Advantage? Budgets are projections of anticipated income and expenses that force brokerage principals to examine income and expenses plus plan the financial results they expect to achieve. What two categories are within budgets: 1) Revenue - money coming into the brokerage such as commissions, investment income, and other income 2) Expenses - Money the brokerage needs to pay to operate - Accounts payable to insurance companies. Lease payments, salaries, AP to insurance companies. Discuss bank accounts and handling of premiums Provincial legislation governs how premium funds are handled. Brokerages must have two bank accounts. One is an operating account, and one is a trust account. Withdrawals can only be brokerages commissions, net premiums, and refunds. What are the aspects of an Accounts Receivable Policy? Discuss. Payment arrangements - Outlines when payment arrangements are to be made and should be when the business is written Credit Checks - If someone wants credit, maybe make an agreement with a bureau Payment Meothods - There are numerous payment methods, policy must outline what we take. Responsibility for Follow Up - Who will execute and enforce credit policy Performance plans are linked to employee performance and there are two types: Profit sharing - commits to sharing actual profits Stock purchase plans - Right to purchase stock immediately There are three tests used to assess the financial condition. List and explain. 1) Acid test - Compares assets to liaiblities to determine how quickly they can be converted into cash. 2) Equity to debt test - Reveals how much the brokerage owes vs owns. 3) Working Capital Defence Interval - Shows how long current working capital will coverage average daily expenses. What are two tests of efficiency? 1) The cost per account ratio. 2) Revenue per employee ratio 3) Lapse ratio 4) Expense ratio 5) Policy Count Ratio What are the four components of the monitoring process? 1) A Management Information Systems - The gathering, collating and presening infrmation in a matter that is useful for measuring performance. 2) Standards and Benchmarks - to accurately measure performace, standards and benchmarks must be adopted and we must check to see if you're meeting them 3) Results - Do a comparison of the actual performance with the estabilished standards 4) Corrective Actions - Identify areas of concern as early as possible and to address critical issues by taking corrective action. What are the four characteristics of an effective management information system? 1) Simplicity 2) Accessibility 3) Merge Capability 4) Adaptability What are the two sets of standards? Historical Standards - what has been done in the past. Engineered standards - Specifically engineered for a group