Assignment 7 - Insurance Distribution Systems and Channels

An agency in New Jersey has decided to market personal insurance to accountants. It is offering a 10% discount to all Certified Public Accountants in the state. This is an example of which one of the following types of group marketing? Select one: A. Affinity marketing B. Worksite marketing C. Franchise marketing D. Sponsorship marketing

A. Affinity marketing

Independent agent networks are known as Select one: A. Agent clusters. B. Agent forces. C. Exclusive agents. D. Direct writers.

A. Agent clusters.

Which one of the following is true concerning the direct response distribution channel to market insurance? Select one: A. It relies heavily on advertising. B. There is less contact between the insurer and the customer with its use. C. It relies heavily on producer interaction. D. Commission costs are generally increased.

A. It relies heavily on advertising.

Which one of the following statements is true with regard to distribution channels for selling insurance? Select one: A. The objective of insurance portals is to deliver leads to the insurers whose products they offer through their sites. B. The objective of group marketing is to sell insurance products and services over the Internet. C. "Franchise marketing" is also known as affinity marketing. D. Mass marketing plans offer insurers' policies to a small number of targeted individuals based upon their demographic characteristics.

A. The objective of insurance portals is to deliver leads to the insurers whose products they offer through their sites.

Leah decides to purchase her personal automobile insurance through a program offered by her employer. Leah's employer offers her a discounted premium which is deducted from her paycheck. Leah's employer is using which type of distribution channel? Select one: A. Worksite marketing B. Mass marketing C. Direct response marketing D. Affinity marketing

A. Worksite marketing

Insurance Company (IC) is updating its marketing plan for the coming year. An important part of the plan is deciding on the distribution system and channel to use. The management team is proposing a combination of the distribution systems and channels. A consideration unique to combining distribution systems and channels is Select one: A. How the insurer will market to all channels so that potential customers will know what is available to them. B. If customers will receive the same message about products and services no matter which system they choose. C. Which system that the insurer has used successfully in the past will be the most cost effective to implement. D. If the insurer will offer a discount in premium to customers who purchase insurance over the Internet.

B. If customers will receive the same message about products and services no matter which system they choose.

Meeting countersignature law requirements for business in multiple states and obtaining access to an increased number of insurers are benefits of which one of the following insurance distribution systems? Select one: A. Surplus lines broker B. Independent agent network C. Managing general agent D. Financial institution

B. Independent agent network

The independent agency and brokerage marketing system uses Select one: A. Exclusive agents. B. Managing general agents. C. Captive agents. D. Direct writer producers.

B. Managing general agents.

The Wellborn agency represents only Coastal Insurance Company. Wellborn is an independent contractor but its contract with Coastal specifies that all insurance it sells will be placed with Coastal. Wellborn is operating under which one of the following marketing systems? Select one: A. The independent agency system B. The exclusive agency system C. The managing general agency system D. The direct writer system

B. The exclusive agency system

Which one of the following statements is true concerning the use of alternative distribution channels to sell insurance? Select one: A. The introduction of new distribution channels has resulted in the elimination of traditional marketing systems. B. The increasing use of multiple distribution channels has been driven by technology and customer preferences. C. Most distribution channels do not allow insurers to contact customers directly. D. Most distribution channels are not yet available for customer service.

B. The increasing use of multiple distribution channels has been driven by technology and customer preferences.

Which one of the following insurance customers is most likely to obtain coverage through a surplus lines broker? Select one: A. An 18-year-old seeking personal auto insurance B. A contractor seeking workers compensation insurance C. A drug manufacturer seeking umbrella liability insurance D. A homeowner seeking flood insurance

C. A drug manufacturer seeking umbrella liability insurance

A business manufactures a product that is harmful to the public if used improperly. More than three licensed insurance companies have refused to provide commercial general liability coverage for the business. The producer should contact which one of the following to attempt to arrange coverage? Select one: A. An independent agent B. A direct writer C. A surplus lines broker D. A managing general agent

C. A surplus lines broker

Which marketing system would be most appropriate for an insurer that wants to be the only company represented by its agents but not have the agents as employees? Select one: A. Independent agency network B. Regional brokerage C. Exclusive agency D. Direct writer

C. Exclusive agency

Which one of the following statements is true regarding traditional marketing systems for insurance? Select one: A. An insurer operating through a managing general agent can expect higher fixed costs. B. A single producer cannot operate as both an agent and a broker in a given state. C. The three traditional marketing systems are the independent agency system, the captive agency system, and the exclusive agency system. D. A principal characteristic that distinguishes one traditional marketing system from another is the ownership of policy expirations.

D. A principal characteristic that distinguishes one traditional marketing system from another is the ownership of policy expirations.

Which one of the following distribution channels is also an efficient way to handle claim reporting and billing inquiries? Select one: A. Direct response B. Affinity marketing C. Financial institutions D. Call centers

D. Call centers

Which one of the following statements is true concerning guidelines for insurers combining systems and distribution channels? Select one: A. Customers expect a different experience when interacting with an insurer's different distribution channels. B. Internal communication can differ across marketing systems and distribution channels. C. Customers are receptive to receiving different messages across the different distribution channels. D. Different marketing systems can be used for different types of insurance based on which is most suitable.

D. Different marketing systems can be used for different types of insurance based on which is most suitable.

Jose reads an advertisement in a national trade magazine for personal automobile insurance. The advertisement encourages the reader to call or to mail an attached postcard for a free quote. This distribution channel is known as the Select one: A. Franchise marketing channel. B. Worksite marketing channel. C. Call center channel. D. Direct response channel.

D. Direct response channel.

Bill is an insurance producer for ABC Insurance Company (ABC). He represents only ABC when marketing insurance products. ABC compensates Bill primarily through salary, and he has no ownership rights to policy expirations. Bill is a producer in the Select one: A. Exclusive agency marketing system. B. Independent agency marketing system. C. Captive agency marketing system. D. Direct writer marketing system.

D. Direct writer marketing system.

Omicron Manufacturing has approached Delta Insurance Brokerage to develop and implement a voluntary insurance program for life, health, and disability insurance for Omicron's employees. Delta puts together a program in which employees receive the coverage at discounted rates, and premiums are deducted from the employees' paychecks. Omicron and Delta are using which one of the following types of group marketing to offer this program? Select one: A. Mass marketing B. Affinity marketing C. Direct response marketing D. Franchise marketing

D. Franchise marketing

Which one of the following types of agent is usually paid a flat commission rate for new business and renewals? Select one: A. Exclusive agent B. Direct writer sales agent C. Managing agent D. Independent agent

D. Independent agent

Which one of the following is generally paid a negotiated fee, rather than a fixed commission rate? Select one: A. Exclusive agent B. Independent agent C. Direct writer sales representative D. National broker

D. National broker

Which one of the following statements about insurance distribution systems and channels is true? Select one: A. Managing general agents (MGAs) serve as employees of direct writer companies. B. Exclusive agents are usually free to represent as many or as few insurers as they want. C. Direct writer marketing systems use sales persons who are independent contractors. D. Surplus lines brokers can place coverage that is not available through standard market insurers.

D. Surplus lines brokers can place coverage that is not available through standard market insurers.