The insurance industry comprises companies and people who develop insurance policies, and sell, administrate, and regulate them. Some insurance companies offer investment products and employ people who develop, sell, administrate, or service these products. Insurance is about managing risk, for both the insurance company and its customers. The company must make sure it collects enough money in premiums to offset customers’ claims while still maintaining a profit. Customers use insurance to minimize risk to their finances in the case of lost or damaged property, lawsuits, illness or accident, business interruption, or premature death.
Today, there are few items of value that can’t be insured. The most common insurance policies are business insurance, car/vehicle insurance, health insurance, home/rental insurance, life insurance, and other property/casualty insurance policies. Some celebrities have insured their body parts or musical instruments. For example, Keith Richards, guitarist with the Rolling Stones, insured his fingers. If his fingers were to be injured to the point that he could never play the guitar again, he would file a claim with his insurance company, in this case, Lloyd’s of London, to receive a check equal in value to that placed on his fingers.
Insurance companies identify a need, for example, the need for car insurance. They conduct research to identify car insurance policies that would be beneficial to customers, and the risk that customers will file claims. Of course, several additional factors play into the calculations, but after these have been considered, the policy is developed, along with its pricing plan.
Insurance is sold in four primary ways, whether to individuals or businesses.
For individuals, families, and small businesses, insurance is sold either through captive or exclusive agents, or through independent agents. Captive or exclusive agents sell only one company's products, e.g., they are captive or exclusive to that company. They look for customers who want their company's products. Independent agents represent different companies; they look for customers who want the products offered by their partner companies. Independent insurance agents form relationships with several insurance companies so that they can shop for the best policies that meet their clients’ budgets instead of offering only one policy from one company. Both types of agents earn commission from the company whose product they sell.
Brokers serve large, complex businesses and group life/health accounts. These individuals represent their business clients to insurance companies rather than the other way around. They receive commissions from the companies but they can also receive retainers or consulting fees from their clients for related services such as loss control.
In the fourth sales model, the insurance company markets its products directly to the public with sales made over the Internet or the phone. In this model, no commissions are paid although the customer representative on the phone must still be licensed to bind the coverage. The money spent on agent commissions by other companies is spent on direct marketing activities such as mailings, advertising, etc.
Once a policy is sold and in place, the companies’ in-house claims adjusters and departments handle claims when customers experience a loss.
Major changes may be on the horizon due to government regulation that will dramatically impact insurance companies, such as the potential revision or repeal/replacement of the Patient Protection and Affordable Health Care Act by the Trump Administration, especially because the insurance industry plays an important role in the U.S. economy. According to the Insurance Information Institute (III), an organization that provides insurance information to the public, there were more than 2.6 million jobs in the U.S. insurance industry in 2018, which had $1.22 trillion in revenue. Major insurance agencies, companies, and employees are located in nearly every city in every state. In 2018, there were an estimated 36,500 independent insurance agencies, according to the III. Insurance companies give a lot of business to companies that supply general office supplies, computers, other electronics, and business services. Customers rely on their insurance companies to pay their claims.
Although there are many types of insurance, and new insurance products are entering the market, most products fall into three primary categories:
- Health insurance: Companies provide coverage to employers, but also to individuals who may be self-employed or who need an individual policy. If the policyholder becomes ill, he goes to the doctor, the insurance company pays part or all of the costs associated with the doctor, depending on the policyholder’s coverage.
- Life insurance: The policyholder buys a policy for a specific value. If that person dies, her beneficiary, the person she names on the policy, receives that amount of money.
- Property and casualty insurance: This insurance covers homes, businesses, vehicles, boats, planes, or other personal objects of value. If the property is stolen or damaged in an accident or due to a natural disaster or an individual or business is involved in a lawsuit, then the policyholder submits a claim to receive reimbursement for property repairs or replacement or assistance and protection for the legal action.
It takes many kinds of workers to keep the insurance industry operating. In addition to jobs found in most industries, such as accountants, attorneys, and human resources, information technology, and marketing professionals, there are several positions unique to the insurance industry. Most jobs involve assessing risk (actuaries), developing products and plans (underwriters), selling the plans (sales agents and brokers), administering the plans, and examining and adjudicating claims (claims adjusters, investigators, examiners). In the health insurance industry, there are even more unique jobs. Health-care professionals help companies develop policies, plans, and procedures. They also help examine insurance claims and act as consultants.
Many people consider insurance jobs to be boring and monotonous, but insurance-related fields are often ranked amongst the most desirable professions available. U.S. News & World Report ranked the career of insurance sales agent as the 80th-best job in 2020, and 12th in best jobs without a college degree (although you’ll need a degree to work in many insurance careers). Actuary, another common insurance industry career, ranked 54th. CareerCast.com ranked the occupation of actuary as the 10th-best job (out of 200 total careers ranked) in 2019 in terms of work environment, income, employment outlook, level of stress, and other criteria. Salaries are strong for many careers in the insurance industry. For example, in 2019, insurance underwriters ($77,640), insurance sales agents ($67,780), and insurance appraisers-auto damage ($66,240) all earned higher mean salaries than the mean ($53,490) for workers in all careers.
Increasing jury awards in areas such as product liability and medical malpractice combined with changing economic conditions and widely varying weather patterns make it challenging for insurance companies to operate profitably. Additionally, consumers tired of rising medical costs and associated raises in insurance premiums are looking to the industry for competitively priced solutions. Insurance companies are ripe for top talent—especially sales agents, actuaries, blockchain developers and other information technology professionals, and data analysts—that can help companies compete in these challenging times.
- Entry-level opportunities are plentiful. If you’re thinking of branching out into other sectors or departments of the insurance industry, it may not be as difficult as you think. There are entry-level positions as sales reps, claims processors, and similar positions that can help you get a new start.
- Higher than average salaries are available with some jobs. Professionals in the insurance industry can earn higher-than-average salaries. For example, in 2019, insurance underwriters ($77,640) and insurance appraisers-auto damage ($66,240) earned higher mean salaries than the mean ($53,490) for workers in all careers. Entry-level workers receive competitive salaries, and benefit packages can also add a great deal of value to the total compensation plan. Sales associates and managers can earn much higher-than-average salaries with commission. Insurance sales agents earned mean annual salaries of $67,780 in 2019.
- Job security. The need for insurance is constant, even if the policies or requirements change. In fact, the demand for all types of insurance is increasing, and so are the jobs related to them. This trend is expected to continue for the next decade.
- Flexibility in work locations and hours. The insurance industry is spread out across the United States, allowing workers the ability to work virtually anywhere in the country that appeals to them. Also, many jobs have different shifts, so if you’re interested in working a second or third shift so you can attend college or for other reasons, jobs in the insurance industry allow you to do this.
- Diversity in responsibilities. As the industry continues to grow and change and many tasks are becoming automated, employees are asked to perform new tasks or take on different responsibilities. For example, claims department representatives are spending less time inputting claims, and more time reviewing them to ensure they are complete.
- Certifications and licensing are recommended/required. Many jobs in the insurance industry either require you to get a license or recommend certification. Any person selling insurance must be licensed. While obtaining a license doesn’t cost a great deal of time or money, it can still be a stumbling block for some people.
- Once you have licensure or certification, it must be maintained. For most certifications, you will need to take continuing education classes or you may be required to take and pass an exam periodically. This is especially true for professional designations.
- You can count on change. If you’re looking for an industry that remains the same over the years, insurance is not the best choice. All facets of the industry are in constant change, due to new technologies, government regulation, and changing consumer demands and concerns. Consumers are steadily becoming more diverse. The insurance industry is struggling to keep up with these changes and to overcome these challenges. The result can be more stress and pressure on employees.
- An uncertain revenue stream. Independent agents or sales agents will also face an uncertain revenue stream. How much you earn will depend on how much you sell. Marketing and networking become critical factors of your success. These can also be seen as major obstacles to many people who prefer a guaranteed paycheck and less stress.
- Nontraditional hours are often part of the job. Because so many companies are competing, most of them offer nearly 24-hour seven-days-a-week service. That means many employees, especially those just launching their careers, may be required to work shifts that include evenings, weekends, and holidays.
- Business Managers
- Financial Institution Officers and Managers
- Financial Quantitative Analysts
- Forensic Accountants and Auditors
- Fraud Examiners, Investigators, and Analysts
- Health Care Insurance Navigators
- Insurance Claims Representatives
- Insurance Fraud Investigators
- Insurance Policy Processing Workers
- Insurance Underwriters
- Life Insurance Agents and Brokers
- Property and Casualty Insurance Agents and Brokers
- Regulatory Affairs Managers
- Risk Managers