100 essay question in entitles Insurance Operations, 2nd Edition

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Chapter 1 HW.docx

Insurance Operations Chapter 1 Questions Name ______________________________

Please remember that you must do your own work. Any plagiarism will result in a grade of zero for all students involved. Please use your own words even if you are using the textbook for answers. Always provide a citation when a reference is used.

1. Explain how stock and mutual insurers differ.

2. Explain what it means when an insurer is licensed in a state.

3. Explain how compliance with legal requirements helps an insurer meet its goals.

4. Explain why the goal of meeting customers’ needs can often conflict with the profit goal.

5. Explain why diversifying risk has become an emerging goal for property-casualty insurers.

6. Describe the advantages (representing fewer constraints) that large insurers have over small insurers in meeting their goals.

7. Explain how the external constraint of required regulatory approvals prevents insurers from meeting their profit and customer need goals.

8. Identify the indicators that insurers can use to gauge their success in meeting customers’ needs.

9. Explain the difference between regulators and financial rating agencies.

10. Identify three core functions that exist within the structure of a typical insurer.

Chapter 10 HW.docx

Insurance Operations- Chapter 10 Name _____________________

1. What key elements do insurer mission statements often include?

2. Identify the three basic components of strategy formulation.

3. Describe the factors in the general environment that managers should consider as part of an environmental assessment.

4. List the five forces that drive competition within an industry.

5. Identify areas within the company that managers would examine to identify organizational strengths.

6. Describe the levels at which strategy is formulated within an organization.

7. Compare forward and backward integration in a vertical integration strategy.

8. Describe the three key areas for an insurer to evaluate in making a strategic decision about expansion into a global market.

9. And 10. XYZ Insurance Company is a personal lines insurer with headquarters in Chicago and regional offices throughout the Midwest and Northeast. XYZ’s reputation as a strong, reliable organization has engendered loyalty among its employees, many of whom have worked for the company for ten years or more. However, because of heavy competition in the types of insurance it writes, XYZ has lost considerable market share in most of its territories and has experienced steadily decreasing profits. XYZ believes that it is losing market share because it has not kept pace with the needs of its existing customers or the buying preferences of prospective customers. Additionally, its research indicates that locally based insurers in each of the regions in which it operates are better equipped to serve insureds because of their agents more effectively interact with the local community. Despite these conditions, XYZ believes that it is positioned to rebound, provided it deploys its resources more efficiently. A recent investment in technology has led to development of a website that will allow XYZ to provide quotes and accept application online. It hopes to use the website’s interactive features to more effectively ascertain its customers’ needs and to test the potential appeal of new endeavors such as “green” insurance options, which it currently does not offer.

A. Identify one of XYZ Insurance Company’s strengths.

B. Identify one of XYZ’s weaknesses.

C. Identify one of XYZ’s opportunities.

Chapter 2 HW.docx

Insurance Operations- Chapter 2 Name_____________________

1. Describe three ways in which the National Association of Insurance Commissioners (NAIC) affects the regulation of insurance.

2. List the three criteria state insurance departments must meet to satisfy the NAIC’s Financial Regulation Standards and to be accredited.

3. Explain the difference between an admitted and a non-admitted insurer, and provide an example.

4. Explain why some states require claim representatives to be licensed.

5. Describe the factors that contribute to insurer insolvencies.

6. Describe the goals of insurance rate regulation.

7. Explain the purpose of the System of Electronic Rate and Form Filings (SERFF).

8. Describe the activities of state insurance departments designed specifically to support consumers.

9. Explain the purpose of financial rating organizations.

10. Explain how advisory organizations function as unofficial regulators of insurers.

Chapter 3 HW.docx

Insurance Operations- Chapter 3 Name_____________________

1. Summarize how the insurance needs of small business can be covered on an insurance policy.

2. List the five characteristics that distinguish types of insurance customers.

3. Contrast primary data and secondary data used for insurer market research.

4. Describe how market intelligence can help an insurer improve its customer focus.

5. Describe two major marketing information systems.

6. Explain why ownership of expiration lists is an advantage to an independent agency.

7. Describe the benefits an independent agent network can offer to its members.

8. Name six methods producers use to locate prospective clients.

9. Identify two advantages of using qualified producers to handle claims.

10. Describe how assessment of its internal strengths and weaknesses can help an insurer in the selection of distribution systems and channels.

Chapter 4 HW.docx

Insurance Operations- Chapter 4 Name_____________________

1. Describe the approaches underwriters take to ensure the adequacy of policyholders’ surplus.

2. Describe the approaches underwriters take to ensure that the policies of accepted applicants adhere to underwriting guidelines.

3. Distinguish between the activities of line underwriters and those of staff underwriters.

4. Describe the components of an insurer’s financial capacity.

5. Explain how rapid premium growth can cause insurers to experience excessive premium-to-surplus ratios.

6. Explain how underwriting guidelines provide a structure for underwriting decisions.

7. List the six general steps in the underwriting process.

8. Describe the factors, beyond the content of a submission itself, an underwriter must consider before selecting an underwriting alternative.

9. Describe what an underwriter would conclude about each of the following combined ratios:

a. A combined ratio of exactly 100%.

b. A combined ratio of greater than 100%.

c. A combined ratio of less than 100%.

10. Insurance Company has incurred underwriting expenses of %5 million, incurred losses and loss adjustment expenses of $14 million, net written premiums of $25 million, and earned premiums of $20 million.

a. Determine Insurance Company’s trade-basis combined ratio.

b. Explain what this ratio indicates regarding Insurance Company’s use of its premium dollars.

Chapter 5 HW.docx

Insurance Operations Chapter 5 Name____________________

1. Describe the benefits an insurer receives by offering risk control services through agents in the independent agency system.

2. Compare how the risk control function assists an insurer’s marketing staff with applicants and with existing customers.

3. Explain the primary reason for premium auditing.

4. Describe how premium auditing contributes data to the ratemaking process.

5. Explain how premium auditing reinforces the confidence of insureds.

6. Describe the process of auditing risk.

7. Explain why accurate premium audits are important for insureds.

8. Explain how the accuracy of a premium audit affects an insurer’s collection of premium.

9. Explain the importance of premium auditing in classifying insured exposures.

10. Explain why timely premium audits are important to marketing and sales.

Chapter 6 HW.docx

Insurance Operation Chapter 6 Name___________________

Please remember that you must do your own work. Any plagiarism will result in a grade of zero for all students involved.

1. Describe the primary goals of the claim function.

2. Differentiate between a first-party claim and a third-party claim.

3. Describe the marketing department’s need for claim information.

4. Identify the two types of performance measures used to evaluate a claims department’s performance.

5. Identify three purposes of claims guidelines.

6. Identify two reasons why insurance regulators monitor the business of insurers.

7. When reviewing coverages, if it is apparent from the loss notice that coverage may not be available for the loss, the claim representative should notify the insured of this concern with one of two documents that also preserve the insurer’s rights. Identify these two documents.

8. Identify the only circumstance under which specified causes of loss coverage covers a loss.

9. List three crucial components of claim documentation.

10. Describe the coverage provided by special form coverage.

Chapter 7 HW.docx

Insurance Operations- Chapter 7 Name____________________

1. Describe the areas covered in the actuarial examination process, other than mathematical models and statistical techniques.

2. Describe the primary goal of ratemaking.

3. Name the three rate characteristics on which regulation is generally based and explain why they are importing.

4. List and define the six basic ratemaking terms.

5. Explain why accurate loss reserve estimates are important.

6. Describe factors that can affect the frequency and severity of claims.

7. Identify the two loss ratios used in the loss ratio ratemaking method.

8. Describe the three general categories of data that insurers collect for ratemaking.

9. Identify three factors that should be considered in determining an appropriate experience period.

10. Identify and briefly describe the two principal types of loss reserves.

Chapter 8 HW.docx

Insurance Operations- Chapter 8 Name ____________________

1. Briefly define reinsurance and discuss the basic purpose of reinsurance.

2. Describe some of the practical business goals that reinsurance can help an insurer achieve.

3. List the six principle functions that reinsurance performs for primary insurers.

4. Identify the three sources from which reinsurance may be purchased.

5. Describe the role of a reinsurance intermediary.

6. Contrast treaty reinsurance and facultative reinsurance.

7. Describe the distinguishing characteristic of quota share reinsurance.

8. Describe the purpose of catastrophe excess of loss reinsurance.

9. List and briefly discuss the factors primary insurers consider to determine their reinsurance needs.

10. Describe the effect a wide geographic spread of loss exposures may have on an insurer’s reinsurance needs.

Chapter 9 HW.docx

Insurance Operations- Chapter 9 Name ____________________

1. Explain how underwriters use predictive modeling to gain a competitive advantage.

2. Explain how insurers use modern IT support and decision-making tools and IT controls to facilitate risk initiatives.

3. Describe data required by underwriters.

4. Describe data required by actuaries.

5. Describe a transaction processing system (TPS) and identify its possible components and uses.

6. Describe the benefits and limitations of using an expert system (ES) to supplement or support human decision making.

7. Explain three sources of risk that can threaten data security.

8. List six best practices for backup that an organization can adopt to ensure data integrity and restoration.

9. Explain why insurers should be particularly aware of security breaches regarding invasion of privacy.

10. Describe an important way to track and measure the success of an IT project.