III IC-103 flashcards
III IC-103 · 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.
- Insurance distribution channel
- Any route by which an insurer reaches customers and completes sale, servicing, and premium collection, such as tied agents, brokers, bancassurance, corporate agents, or direct online sales.
- Tied agency
- An agency arrangement where the agent represents one insurer or a defined panel and sells only that insurer's products, giving the insurer direct control over sales conduct and training.
- Bancassurance
- Distribution of insurance products through bank branches and staff or dedicated advisers, leveraging existing customer relationships and account data to reach savings-oriented buyers.
- Insurance broker
- An intermediary who acts on behalf of the customer rather than the insurer, comparing products across insurers and advising on suitable cover, usually for larger or commercial risks.
- Corporate agent
- A firm such as a bank, motor dealer, or retailer that is licensed to distribute insurance through its own staff and premises under an agreement with one or more insurers.
- Direct channel
- Sale of insurance directly by the insurer to the customer through branches, telephone, or online platforms, without an external intermediary, reducing commission cost but requiring in-house marketing.
- Worksite marketing
- Distribution through an employer or affinity group that offers insurance to members at the workplace or via payroll deduction, giving access to a pooled membership at low acquisition cost.
- Principal-agent problem
- The risk that an intermediary pursues its own interest, such as volume-driven commission, rather than the insurer's goals of persistency and suitable sales, requiring monitoring and aligned incentives.
- Commission clawback
- A contractual provision requiring an intermediary to repay part or all of a paid commission when the policy lapses or is cancelled within a defined early period.
- Renewal commission
- Commission paid to an intermediary on each renewal premium while the policy remains in force, rewarding servicing and persistency rather than only new-business volume.
- Persistency rate
- The share of policies still in force at a given duration, such as 13 or 25 months after issue; a key quality measure of a distribution channel's sales.
- Churning
- Replacement of an existing policy with a new one mainly to generate fresh commission, often harming the customer through new waiting periods, higher age-rated premiums, or lost benefits.
- Suitability assessment
- The process of matching a recommended product to the customer's needs, financial situation, and objectives, documented as evidence that advice given was appropriate.
- Product-channel fit
- The principle that product complexity, ticket size, and servicing needs must match channel capability, for example simple savings products in banks and complex protection with advisers.
- Channel conflict
- Friction between distribution routes competing for the same customers, managed through lead-allocation rules, exclusive product variants, and consistent compensation.
- Cost per acquired policy
- Total channel acquisition cost, including commission, marketing, and support, divided by the number of new policies issued, used to compare channel efficiency.
- Orphan policy
- A policy whose original intermediary has left or been terminated, requiring the insurer to reassign servicing so that customers retain support and renewal collection continues.
- Intermediary onboarding
- The pre-activation process of verifying licensing, qualifications, identity, and conflicts of interest, and training the intermediary on products, conduct, and anti-money-laundering rules.
- Replacement ratio
- The proportion of an intermediary's new business that replaces existing policies, monitored as an indicator of possible churning and unsuitable advice.
- Lead allocation rule
- A documented method for assigning customer enquiries among channels or advisers, preventing duplicate pursuit, undercutting, and disputes over who owns a sale.
- Sales illustration standard
- The prescribed format for showing projected benefits, charges, and exclusions before purchase, ensuring customers compare products on consistent and non-misleading assumptions.
- Free-look period
- A period after policy issue during which the customer may cancel and receive a refund of premium, often triggering recovery of commission paid to the intermediary.
- Channel scorecard
- A periodic performance report covering new premium, persistency, complaint ratio, replacement ratio, training completion, and audit findings for each intermediary or channel.
- Premium leakage
- Failure to collect renewal premium that should have been due, often caused by weak intermediary servicing or poor payment setup, reducing in-force value.
- Affinity group marketing
- Distribution through a membership organisation such as a union, club, or association that endorses insurance to its members, relying on shared trust to lower acquisition cost.
- Digital distribution
- Sale and servicing of insurance through websites, apps, or comparison platforms, requiring clear online disclosure of features, exclusions, and consent records before purchase.
- Tied-agent exclusivity
- A contractual restriction preventing an agent from selling competing insurers' products, protecting the insurer's investment in training and customer data.
- Mis-selling
- Sale of a product that does not meet the customer's needs or is presented with misleading information about benefits, charges, or exclusions, exposing the insurer to redress and penalties.
- Distribution expense ratio
- Distribution costs, including commission and channel support, expressed as a percentage of premium or of new business value, used to benchmark channel profitability.
- Intermediary suspension
- Temporary withdrawal of an intermediary's authority to sell, used when monitoring reveals excessive lapses, complaints, or conduct breaches, pending investigation.
- New-business value
- The present value of expected future profits from policies written in a period, sensitive to channel mix, product margin, and expected persistency.
- Customer consent record
- Retained evidence that the customer received key features, exclusions, and premium terms and agreed to proceed, essential for direct and online distribution disputes.