Types of Marketing Systems

An insurance marketing system that uses sales agents who are direct employees of the insurer?

Types of Marketing Systems

An insurance marketing system underwhich agents contract to sell insurance exclusively fro one insurer (or for an associated group of insurers)

Types of Marketing Systems

• Not employees of the insurers
• restricted by contract to representing a single insurer

Types of Marketing Systems

An insurance marketing system underwhich producers (agents or brokers), who are independent contractors, sell insurance, usually as representatives of several unrelated insurers

1. Agents
2. Brokers

Independent Agents and Brokers

Types of Marketing Systems

• Producers are not employees of insurers
• Are free to represent as many or as few insurers as they want
• Own policy expirations and can place business whith any other other insurers they represent.

1. Flat percent commission on all business submitted
2. Profit-sharing commission earned by meeting volume or profit goals

Types of Marketing Systems

• provide risk management advice to their customers, helping them to select the insurance coverages needed an on the most advantageous terms
• Assist their customers:
  •  in establishing and managing self-insurance programs
  • implementing loss control measures
  • detrmining alternatives or supplements to insurance

1. Aon
2. Willis
3. Marsh

Types of Marketing Systems

An insurance marketing system that uses sales agents who are direct employees of the insurer?

Types of Marketing Systems

Compensated by salary, by commission, or by both salary and a portion of the commission generated

1. Exclusive agents
2. Direct writers

1. Earn a profit
2. Meet customer needs
3. Comply with legal requirements
4. Fulfill duty to society

Types of Marketing Systems

Liberty Mutual uses which marketing system?

Types of Marketing Systems

• Run advertisemetns and run a call center
• Don't have agents knocking on doors

Types of Marketing Systems

• Direct mail has ______ sales costs?

Types of Marketing Systems

• Direct mail has ______ marketing costs (cost to sell insurance)

Types of Marketing Systems

• GICEO and USAA are examples of which marketing system?

Types of Marketing Systems

Does direct mail offer commission?

Types of Marketing Systems

Offers less service to customers (no agents)?

Types of Marketing Systems

Focus on large, simple markets?

Types of Marketing Systems

• Persons or firms that place business with insurers not licensed (nonadmitted) in the state in which the transaction occurs but that are permitted ("eligible") to write insurance because coverage is not available through standard market insurers

Types of Marketing Systems

• more flexibility in solvency and products

Types of Marketing systems

• Do great in hard markets
• Mainly commercial business

1. Have access to insurers that ahve the capacity to provide the needed insurance
2. Can use to place coverage on an unfavorable loss exposure (one that has a poor claim history, difficult to treat exposures, etc.)

1. Sales
2. Underwriting
3. Claims
4. Risk Management

Expenses by line (%)

• Surety?

Expenses by line (%)

Boiler and Machinery?

Expenses by line (%)

Workers Compensation?

1. quicker service to policy holders
2. lower loss adjustment expenses (LAE)

Types of Marketing Systems

attracts buyers who have complex insurance needs or consider quality of service more important than cost

Types of marketing systems (2)

Successful in dealing with large volumes of insurance buyers who have relatively simple needs- primarily individuals; families; and small, main-street-type businesses

Types of marketing systems (2)

Appealed most successfuly to customers who are more concerned with price than iwth personalized serivce?

Types of Marketing approaches

• Agent goes to group and offers a contract for term life on all employees
• Is voluntary for employees to participate, then company individually underwrites each application

Types of Insurance marketing?

• Offer an insurer's policies to large numbers of targeted individuals or groups
• Coverage is frequently offered at a discounted premium, and the insurer retains the right to underwrite each applicant, with guaranteed policy issuance available as an option

1. Less Administrative expenses
2. Aviod adverse selection ( on average lower claims, lower expenses)

Insurers and producers derive a number of benefits from having an _________ presence, including:

• Reduced costs for underwriting and claim processing serives because of lower overhead arising form automated operations
• Streamlined business practices-- fewer employees are needed to conduct direct sales
• Increased brand awareness
• Broadened marketing potential
• Lead-generation and cross-selling opportunities for all products, not just property-casualty insurance

1.  bEvaluate loss exposures
2. Monitoring the loss exposures
3. Implementing the underwriting decision
4. Determining the appropriate premium
5. Selecting un underwriting alternative
6. Determining underwriting alternatives

Types of hazards

A tangible condition of property, persons, or operations that increases the frequency or severity of loss

Types of hazards

A condition that increases that likelihood that a person will intentionally cause or exaggerate a loss; basically conducting fraud

Types of hazards

A condition of carelessness or indifference that increases the frequency or severity of a loss

Types of hazards

A condition of the legal environment that increases loss frequency or severity

• Used when companies don't apply underwriting standards used in a uniform way
• A type of discrimination?

• Only store medical hard facts (ex. major back problem)
• Do not store decisions about whether to accept/reject an application

1. Preferred
2. Standard
3. Substandard

Categories of business for underwriters

____________- get a discount on rates, 10% of business

Categories of business for underwriters

____________- 80%

Categories of business for underwriters

___________- pay a higher premium, 10%

T/F?

Underwriters may still write insurance coverage for a marginal policy to keep the other profitable business from that client?

T/F?

You should hold a wide mix of bsuiness to diversify location exposure?

__________ __________ endorsement:

An endorsement that provides that, in the event of the insolvency of the primary insurer, teh reinsurer directly assumes the obligations of the primary insurer?

Types of Reinsurance:

• case by case
• no obligation by either party
• flexibility and cost

Types of Reinsurance:

• automatic
• obligation by both parties

Reasons for Reinsurance:

Increases ______ line capacity?

Reasons for Reinsurance:

Makes _______ insurers competitive

Reasons for Reinsurance:

Smoothes________ and _________ taxes?

Reasons for Reinsurance:

Stabilizes _______ ratio?

Reasons for Reinsurance:

Improves _________ and reported results

Non-proportional or excess treaties:

Contract is completely ________ of policies?

___________-__________ capacity:

A primary insurer's ability to provide a large amount of insurance under a single policy.

________ relief:

A flow of funds into an insurer's policyholders' surplus when policy holders' surplus has been reduced by the ineurer's rapid growth in written premiums

__________ reinsurance:

an agreement in which the primary insurer agrees to cede certain types of loss expsoures, and the riensurer agrees to accept the loss exposures that fall within the treaty?

__________ reinsurance:

An agreement that is negotiated separately for each loss exposure the primary insurer wants to reinsure and that gives the reinsurer the right to accept or reject each loss expsoure

___________ _______ reinsurance:

An agreement in which the amount of insurance, premium, and losses are divided between the primary insurer and the reinsurer in the same agreed portions (proportional reinsurance)

____________ ___ ___________ reinsurance?

An agreement that requires a reinsurer to pay that portion of a loss that exceeds the primary insurer's retention up to the reinsurance limit (nonproportional reinsurance)

_____________ ___________ ___________:

A pro rata reinsurance agreement under which the primary insurer cedes a fixed, predetermined percentage of every loss exposure it insurers within a calss or classes

Types of Reinsurance:

Main purpose: to provide surplus relief?

Types of Reinsurance:

Does quota share stabilize loss experience?

Types of Reinsurance:

Does quota share improve large-line capacity?

Types of Reinsurance:

Does quota share provide catastrophe protection?

Types of Reinsurance:

Does quota share provide surplus relief?

Types of Reinsurance:

Does Surplus share stabilize loss experience?

Types of Reinsurance:

Does surplus share improve large line capacity?

Types of Reinsurance:

Does surplus share provide catastrophe protection?

Types of Reinsurance:

Does surplus share provide surplus relief?

Types of Reinsurance:

Main purpose: to provide large-line capacity while providing some surplus relief?

Types of Reinsurance:

• Does excess of loss per risk or per policy stabilize loss experience?

Types of Reinsurance:

• Does excess of loss per risk or per policy improve large line capacity?

Types of Reinsurance:

• Does excess of loss per risk or per policy provide catastrophe protection?

Types of Reinsurance:

• Excess of loss per risk or per policy, is this type of insurance purchased for the main purpose of catastrophe protection?

Types of Reinsurance:

• Does Excess of loss per risk or per policy provide surplus relief?

Types of Reinsurance:

• Main purpose: to provide large line capacity while stabilizing loss experience?

Types of Reinsurance:

• Does Excess of loss per occurrence stabilize loss experience?

Types of Reinsurance:

• Does Excess of loss per occurrence improve large line capacity?

Types of Reinsurance:

• Does Excess of loss per occurrence provide catastrophe protection?

Types of Reinsurance:

• Does Excess of loss per occurrence provide surplus relief?

Types of Reinsurance:

• Main purpose: to protect against catastrophic losses from one event

Types of Reinsurance:

• Does Aggregat excess of loss stabilize loss experience?

Types of Reinsurance:

• Does Aggregat excess of loss improve large-line capacity?

Types of Reinsurance:

• Is Aggregat excess of loss purchased for the main purpose of improving large line capacity?

Types of Reinsurance:

• Does Aggregat excess of loss provide catastrophe protection?

Types of Reinsurance:

• Does Aggregat excess of loss provide surplus relief?

Types of Reinsurance:

• Main purpose: to stabilize loss experience

______ ______ treaty:

 a pro rata reinsurance agreement in which the reinsurer assumes pro rata responsibility for only that portion of a loss exposure's liability that exceeds a stipulated dollar amount?

Types of Reinsurance:

• An aggreage excess or stop loss treaty has usually very high ________ levels?

____________ _____________ excess of loss treaty:

A reinsurance agreemnt that indemnifies teh primary insurer when teh losses for an occurrence exceed teh primary insurer's retention?

_________ excess of loss treaty:

• A reinsurance agreement that helps the primary insurer manage a large accumulation of losses from a single event, such as a hurricane or an earthquake?

____________ excess of loss treaty:

A reinsurance agreement under which the reinsurer begnins to pay when all of the primary insurer's losses for some stated period of time exceed teh retention stated in teh treaty?

________ ______ Facultative reinsurance:

A reinsurance agreement for individual loss exposures in which the reinsurer shares a pro rata portion of the losses and premiums of the ceding company?

___________ ___ _________ Facultative reinsurance:

A reinsurance agreement for individual loss exposures in which the primary insurer pays all losses up to its agreed retention and teh reinsurer pay slosses in excess of the retention up to teh reinsurance limit?

Facultative Reinsurance

_________ share is adminstratively more costly?

Faculatative Reinsurance:

Pro rata facultative- usually use _____ share?

Facultative Reinsurance:

Excess of loss facultative:

Ususally on a per _______ or per ________ excess?

Reinsurance Underwriting:

Facultative focuses on ________?

• Character
• Capacity
• Capital

Reinsurance Underwriting:

• Treaty focuses on the 3 C's?

Insurance Marketing:

Broker vs. Direct: What % of the market uses the broker marketing channel?

Contract of ___________?

• Any ambigiuties go in favor of the insured
• insurance company has much know knowledge than the public

Primary insurer:

Is having reinsurance a subsititute for keeping adequate surplus on hand?