CIC Agency Management flashcards
CIC Agency Management · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Agency management definition
- The planning, organizing, staffing, directing, and controlling of an agency's people, carriers, clients, and finances to achieve growth and profit goals.
- Ownership of expirations
- The contract clause stating who owns client records and renewal rights when an agency-carrier or producer-agency relationship ends; central to agency value.
- Recoverable draw
- An advance against future commissions paid to a producer; the agency recovers the unearned balance from later commissions or from the producer on departure.
- Non-recoverable draw
- A salary-like advance to a producer that the agency does not require to be repaid; it shifts cash-flow risk to the agency rather than the producer.
- Expense ratio
- Operating expenses divided by total agency revenue; a key efficiency measure, with lower values indicating more revenue generated per dollar of operating cost.
- Revenue per employee
- Total agency revenue divided by full-time equivalent employees; a productivity benchmark used to compare staffing efficiency against similar agencies.
- Contingency income
- Profit-sharing paid by carriers when an agency meets loss ratio, growth, and retention thresholds; it is variable income that must be tracked during the year.
- Premium trust account
- A designated account holding agency-billed client premiums; funds are fiduciary, cannot be commingled with operating money, and must be reconciled regularly.
- Buy-sell agreement
- A contract among agency owners setting how an owner's interest is valued and transferred on death, disability, or retirement, often funded by insurance.
- Perpetuation plan
- The agency's documented strategy for continuing ownership and management beyond the current principals, covering valuation, funding, and leadership succession.
- Producer selection profile
- A written set of hiring criteria such as licensing, sales aptitude, ethics, and market knowledge used to screen producer candidates consistently.
- Continuing education requirement
- State-mandated credit hours, commonly 24 per two-year license term, that producers must complete to renew licenses and maintain appointments.
- Carrier appointment
- A carrier's authorization for a producer or agency to solicit and submit business on its behalf; business submitted without appointment is generally prohibited.
- Agency management system
- Software that centralizes client data, policy detail, accounting, and workflow; consistent use of suspense dates and notes protects data integrity.
- Cross-sell ratio
- Policies or lines per household or account; raising it increases revenue from existing clients at far lower acquisition cost than new-client prospecting.
- Retention rate
- The percentage of accounts or premium renewed over a period; a small improvement often produces more profit than comparable new-business growth.
- Close ratio
- Quotes bound divided by quotes issued; a core producer activity metric used in coaching and performance reviews.
- File audit
- A periodic review of client files for documentation, coverage checks, and compliance; a preventive control against errors-and-omissions claims.
- Errors and omissions insurance
- Professional liability coverage protecting the agency against claims of negligent advice, failure to place coverage, or failure to document client instructions.
- Claims-made policy
- E&O coverage responding to claims reported during the policy period; the retroactive date determines which prior acts are covered.
- Fiduciary duty
- The legal obligation to hold client or carrier funds in trust and use them only for the intended purpose; breach can lead to license revocation.
- Agency budget variance
- The difference between budgeted and actual revenue or expense; managers investigate variances beyond a set threshold to correct plans early.
- Renewal book forecast
- A revenue projection built from the prior year's commission income adjusted for expected retention, rate change, and new-business additions.
- Cluster or network
- A group of independent agencies that pool volume for carrier access and contingency leverage while each retains ownership of its expirations.
- Book of business valuation
- The price assigned to an agency's renewal commissions, often a multiple of annual commission revenue adjusted for retention, growth, and concentration.
- Earn-out provision
- Purchase price terms that pay the seller over time based on post-sale retention or revenue, aligning seller incentives with book persistency.
- Non-solicitation agreement
- A contract term barring a departing producer from soliciting agency clients or employees for a defined period, subject to state enforceability rules.
- Account segmentation
- Classifying clients by revenue and complexity into tiers so service standards and staff time are allocated to the highest-value relationships.
- Service standards
- Written response-time and workflow commitments, such as quote turnaround and renewal review timelines, used to measure and manage service quality.
- Business continuity plan
- Documented backup for key roles, data recovery, and carrier communication so the agency can operate during an owner's absence or a disaster.
- Producer compensation ratio
- Producer compensation divided by revenue the producer generates; it shows whether pay design is aligned with the revenue each producer produces.
- Agency agreement termination clause
- Contract terms setting notice periods and post-termination commission rights when a carrier or agency ends the relationship.