cpcu 520 ch 3 review notes

Question 1

Primary demand for technology

Answer 1

ease of use

Question 2

Activities performed by marketing

Answer 2

Marketing research, market dvelopment, marketing info, marketing planning, product development, advertising/promotion, customer and public relations, sales fulfillment

Question 3

Two broad categories of market data

Answer 3

Secondary data and primary data

Question 4

Secondary data

Answer 4

collected by other parties, research typically begins w/ this as it is immediately available @ no cost

Question 5

Primary data

Answer 5

collection more expensive, addresses specific issues

Question 6

Bases of market segmentation

Answer 6

Behavioristic (purchase behavior)
Geographic (geographic units)
Demographic (demographic variables ie age gender etc)
Psychographic (values, personalities etc)

Question 7

Marketing segment should be

Answer 7

Accessible, substantial, responsive

Question 8

marketing info activity system types

Answer 8

Inernal accounting system

Marketing monitoring system (external enviroment)

Question 9

Typical marketing plan

Answer 9

product proposal/sales goals
situational analysis
marketing goals
marketing strategies
projected outcome

Question 10

Product dvelopment steps

Answer 10

opportunity assesment, development of contract, uw and pricing, business forecast, regulatory requirements, distribution requirements, introduction

Question 11

Insurance broker

Answer 11

independent bus owner/firm selling ins by representing customers rather than insurers

Question 12

Distinction btwn independent agents/brokers & other distribution systems

Answer 12

ownership of agency expiration list

Question 13

Compensation for independent agents/brokers

Answer 13

Flat percent commission, contingent or profit-sharing commission basedon volume or loss ratio goals

Question 14

Independent agent networks/agent groups/agent clusters/agent alliances

Answer 14

independent agencies/brokerages joining together to gain advantages normally available only to lg national/regional brokers

Question 15

managing general agents (MGA’s)

Answer 15

intermediaries btwn insurers and agents/brokers who sell ins directly to customer. Advantage: low fixed cost, specialty expertise, assumption of insurer activities

Question 16

Exclusive agency mkt system

Answer 16

independent contractors called exclusive/captive agents, not employees of insurers - represent a single insurer, do not own expirations

Question 17

Direct writer system

Answer 17

uses sales agents who are employees of insurers they represent

Question 18

Group marketing

Answer 18

sells ins through call centers, internet, direct mail or producer to individuals or members of same organization

Question 19

risk management review

Answer 19

primary method of determining prospect’s ins needs

Question 20

methods of transmitting prem to insurer under agency bill

Answer 20

Item basis (prem forwarded when collected or when becomes due)
Statement basis (insurer sends statement to producer showing premiums due)
Acct current basis (producer prepares statement showing premiums due to insurer after deducting commission

Question 21

Market intelligence

Answer 21

info gathered/analyzed regarding a co.’s markets to improve competitive decision making

Question 22

countersignature laws

Answer 22

laws requiring all policies covering subjects of ins within state to be signed by resident producer licensed in that state

Question 23

Affinity marketing

Answer 23

type of group marketing targeting various grps basd on profession, assoc, interests, hobbies, attitudes

Question 24

direct bill

Answer 24

insurer assumes all responsibilty for sending prem bills to insd & collecting prem