Transcript FIN 321 Principles of Risk Management and Insurance Insurance

FIN 321
Principles of Risk Management and Insurance
Insurance Production
Russ Rucker, AAI, CPCU
Rucker, Billups & Fowler Inc.
Huntington, WV
Topics of Discussion
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What is insurance production?
Types of Insurance Marketing Systems
What is the role of a producer?
Risk Management Process
Gathering of Information-Data Sheets and
Checklists
• Case Studies
What is Insurance Production?
• Production refers to the sales and marketing
activities of insurers
• Agents are often referred to as producers
• Life Insurers have an agency or sales department
• Property and Liability insurers have marketing
departments
• An agent should be a competent professional
with a high degree of knowledge in a
particular area of insurance and who also
places the needs of his or her clients first
Types of Insurance Marketing Systems
• Independent Agency- a business firm that
usually represents several unrelated insurers
– Agents are paid a commission which will vary by
the line or type of insurance. The amount of
business can result in additional compensation to
the agent
– Agency owns the expiration or renewal rights to
the business
Types of Insurance Marketing Systems
• Exclusive Agency System- the agent represents
only one insurer or group of insurers under
common ownership
– Agents do not usually own the expiration or
renewal rights to the policies
– Agents are generally paid a lower commission rate
on renewal business than on new business
Types of Insurance Marketing Systems
• Direct Writer- an insurer in which the
salesperson is an employee of the insurer, not
an independent contractor. Employees are
usually compensated on a “salary plus”
arrangement
Types of Insurance Marketing Systems
• Direct Response- the insurer sells directly to
the consumer by television or some other
media Usually used to sell personal lines of
insurance
• Multiple Distribution Systems- some insurers
use variations of all or some of the above
systems
What is the role of a producer?
Risk Management Process
• Identify loss exposures
• Measure and analyze loss exposures
• Select the appropriate combination of
techniques for treating the loss exposures
• Implement and monitor the risk management
process