• Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off

Card Range To Study



Play button


Play button




Click to flip

Use LEFT and RIGHT arrow keys to navigate between flashcards;

Use UP and DOWN arrow keys to flip the card;

H to show hint;

A reads text to speech;

27 Cards in this Set

  • Front
  • Back

What are the three elements to organizing effectively?

1. Creating an Organizational Structure

2. Defining Employee Relationships

3. Establishing Position Descriptions

What are the different types of organizational structure?

1. Line Organization - best suited to smaller brokerages

2. Functional Organization

3. Line and Staff Organization - best suited to larger brokerages

What are the pros/cons of Line Organization?

+ Simple

+ Clear delegation of authority

+ Quick decision making

-- Managers must be fully knowledgeable in wide range of areas

-- Power concentrated at the top since senior management must be involved in all decisions

-- limits growth & development of employees by stifling innovation

What are the pros/cons of Functional Organization?

+ Provides employees with expert advice

+ Decisions made by management specialist

-- employees have more than one boss so may be given inconsistent/conflicting instructions

-- Decision-making can be slow

-- Too many managers may cause employees to be frequently distracted from their primary roles of serving their clients

What are the pros/cons of Line and Staff Organization?

+ Areas of authority & responsibility are clearly defined

+ Decisions can be made quickly

+ Encourages better communication & co-operation

-- conflicts can arise if a staff manager attempts to exert line authority

-- Line managers may resent having to seek advice they feel obliged to accept

-- Brokerage must be large enough to generate sufficient revenue to cover the direct costs of production

Why should employee relationships be clearly defined?

To avoid confusion. The flow of authority and responsibility must be clearly defined.

Employees held responsible for activities over which they have no control are frequently frustrated and have morale problems.

What should a position description have?

1. Title

2. Purpose

3. Primary Responsibilities

4. Scope of Position

What is a sole proprietership? What are its pros/cons?

A business owned by a single individual

+ Right to all profits

+ Easy to start

+ Decision making process simplified

-- all liability rests with owner

-- expertise limited to owner

-- business lives and dies with owner

What is a partnership? What are its pros/cons?

A voluntary association of two or more persons who are co-owners

+ Broader expertise

+ Liability shared

+ Business doesn't live/die with owner

+ Earning 'all the profits'

-- more potential for conflict

-- difficult to dissolve

-- partnership agreements should be in place

What are the differences between a general and limited partnership?

General - all of the owners are general partners with all the rights and obligations of a partner who operates the enterprise

Limited - includes at least one general partner and at least one limited partner

What are the advantages to a limited partnership?

The maximum personal liability of each limited partner is the value of the capital invested by that partner unless the partner becomes active in the management of the business

What is a corporation? What are the pros/cons?

A legal entity created by the government charter, ownership of which is evidence by shares of stock.

+ liability limited to corporate assets only

+ tax advantages (corporate tax rates)

-- start-up fees

-- legal fees

-- greater scrutiny by CCRA

What is an operating affiliation?

They are not legal forms. They are ways the brokerage can draw upon support form within the insurance industry to achieve its marketing and sales goals

What are the four types of operating affiliations?

1. Loosely Knit Affiliations

2. General Purpose Groups

3. Clusters

4. Common Identity Groups

What is a loosely knit affiliation?

Owners and managers of brokerages meet on an informal basis to discuss common opportunities or threats

What is a general purpose group?

Purpose is to provide brokers with a diverse package of resources (i.e. education, preferred attention from insurance companies, management assistance)

What is a cluster?

Brokerages which band together to share 'back room' services such as processing and technology.

Insurance companies also frequently accord preferential treatment to larger entities.

What is a common identity group?

Organizations are established to give participating brokerages an image and resources of national or international strength like Assurex.

What should be considered when evaluating an operating affiliation?

1. Services & Support

2. Exclusivity

3. Fees

4. Contractual Agreement

5. Financial Strength

What does the term 'agency' mean?

Used to describe the relationships that exists when one entity acts on behalf of another. It is a fiduciary relationship where one entity (the principal/client) authorizes another (the agent) to act on its behalf in business dealings with other parties.

What is authority?

The legal power of the insurance agency or brokerage arising from the relationship with the insurance company

What are the three types of authority?

1. Express Authority

2. Implied Authority

3. Apparent Authority

What is express authority?

Anything legal that the parties agree to either verbally or in writing

i.e. binding authority

What is implied authority?

other acts that are deemed necessary in conjunction with the express authority but which are not addressed in the contract

i.e. advertising

What is apparent authority?

authority that an innocent third party might perceive that a brokerage has but which, in fact, has not been given to the brokerage by the insurance company

What is ratification?

Retroactive approval.

When, after a transaction has been completed, the insurance company (with full knowledge of the unauthorized act) accepts what the brokerage has done, it is as if the insurance company had grated authority in the first place.

What are the two possible meanings for the term 'sub-brokers'

1. The brokerage appoints an individual to represent it. The brokerage is then responsible for the actions of this individual as if s/he were an employee

2. When a brokerage has difficulty placing business with its own markets and becomes a sub-broker by placing this business through another brokerage. In this case the sub-broker has no binding authority but still has a responsibility to its clients.