Insurer Management and Distribution Flashcards
Who are considered part of management?
Executives
Actuarial Department
Underwriting Department
Marketing/Sales Department
Claims Department
what do the executives do?
Oversee the operation of the business
what do the Actuarial Department do?
Gather and interpret statistical information used in rate making. An actuary determines the probability of loss and sets premium rates.
what do the Underwriting Department do?
Responsible for the selection of risks (persons or property) to insure and rating that determines policy premiums
what do the Marketing/Sales Department do?
Responsible for advertising and selling
what do the Claims Department do?
Assists the policyholder, insured, or beneficiary in the event of a loss and processes, and pays the amount of the claim in a timely manner, based upon the contractual provisions and the amount insured
Exclusive or Captive Agency System
An exclusive or captive agent represents only one company or a group of companies that have common ownership. The insurer retains ownership rights to the business written by the agent and may or may not provide the agent with office and agency support services. The agent is an employee or a commissioned independent contractor.
Direct Writing System
A producer or agent is an employee of the insurer, and the insurer owns the accounts. The agent may be paid a salary, salary and a bonus, or commission.
Independent Agency
An agent or agency enters into selling agreements with more than 1 insurer; an unlimited number of insurers may be represented. The agency retains ownership of the business written. The independent contractors are paid a commission and must cover the cost of agency operations.
Career Agency System
Agents are recruited, trained and supervised by either a managing employee or General Agent who is contracted with the insurance company
Personal Producing General Agent
The agent sells insurance for carriers it is contracted with and maintains its own office and staff. These agents do not recruit career agents.
Direct Mail or Direct Response Company –
Insurers sell insurance policies directly to the public via licensed employees or contractors. They use a marketing system that utilizes mass media, such as direct mail, newspapers, magazines, radio, television, internet, web sites, call centers, and vending machines.
Mass Marketing
This type of marketing uses the direct response or direct mail method to target a specific type of insurance to a large group of individuals, such as the American Association of Retired People (AARP). The insurer may benefit through reductions in marketing costs and underwriting expenses may be lower when coverage is offered to a limited population. Associations may receive some financial benefit from allowing an insurer to market directly to its membership
