Americans can insure just about anything. Drivers are required to get automobile insurance, renters and homeowners insure against theft and damage, and businesses must protect themselves from lawsuits. This is just skimming the surface; the Insurance Information Institute reported that $1.1 trillion in premiums were paid to insurance companies in 2014 to insure everything from properties to pets. To handle the demand, the industry employed about 2.5 million people to set premiums, sell plans, evaluate claims and perform other essential functions. This guide gives readers information about careers within the insurance subsector along with related degree information, corresponding salaries and job outlook.
Workers can enter the insurance industry with anything from a high school diploma to a graduate degree. According to an O*NET survey, 35 percent of claims adjusters who responded had a bachelor’s degree compared to 81 percent of underwriters. Yet unlike with some fields, in which higher educational barriers to entry equate to greater demand and job growth potential, this is not necessarily true in the world of insurance. Underwriter jobs, for instance, are shrinking due to computer automation. Meanwhile, sales jobs, which rely on interpersonal skills more than formal education, are anticipated to grow at a rate of 10% this decade. The industry, then, welcomes a variety of people with a mix of backgrounds, knowledge and skills. A few of the more common career paths are outlined below.
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Actuaries assess risk so they can set premiums. They usually specialize in one type of insurance. For instance, property insurance actuaries will analyze data about natural disasters to determine how much the insurance company would have to pay out in benefits should an earthquake occur. This helps the company set appropriate premiums so it can remain profitable even if disaster strikes.
When an insured person needs to make a claim — perhaps due to a car accident, home theft or earthquake damage — the insurance company must assess the damage and compensate the insured person. To do this, an adjuster conducts interviews, inspects the scene and gathers other information to get a clear sense of what happened. This information is reported to a claims examiner (see below). The adjuster then makes a specific offer to the claimant for how much the company will pay. If this amount is rejected, the adjuster works with company lawyers to back up the company’s position. However, some adjusters are hired directly by claimants; their goal is to get larger offers than those offered by insurance companies.
Examiners work closely with claims adjusters. They review submitted claims to determine whether they should be paid or denied. Their main job, then, is to decide whether claims are reasonable; they leave the precise compensation to claims adjusters.
Clerks do administrative work, processing policies that are bought by customers as well as claims that are made. They make sure that records are up to date so that their colleagues — adjusters, sales agents, underwriters and others — are working with accurate information.
If the examiner believes a claim to be suspicious, she or he refers the case to an investigator, whose role is to protect the company from suspected insurance fraud. An investigator may, for instance, do initial research to find out if a house fire was the result of arson, which would constitute fraud and void the claim.
As the name implies, insurance sales agents sell insurance policies of all types to customers. They work in three general areas: property and casualty insurance; life insurance; and health insurance. Their goal is to help customers purchase a plan that suits their needs, whether it is a business who needs to insure against product liability or an individual who needs to cover a car against theft. Agents help customers consider premium costs, deductibles and other financial considerations. Agents can either work for one insurance company or they can work for brokerages, in which case they show individual clients options from multiple companies and pair them with the best one for them.
Whereas actuaries look at risks broadly, underwriters apply these risks to specific cases, assessing the likelihood that the insurance company will profit by selling insurance to a person or business. For instance, they judge whether to provide insurance to a homeowner who lives in an area prone to fires or whether to provide auto insurance to a driver with a history of accidents. Underwriters must balance risk and reward. If they do not issue insurance, the company loses out on income from premiums. If they do, the insurance company may lose money if a claim is made.
Many insurance careers require only a high school diploma for entry, while higher-level workers will hold a master’s degree. The range in academic qualifications needed means there is a corresponding range of salaries available in the subsector. Below are estimated 2014 salaries from the Bureau of Labor Statistics.
The skills needed to start a career in insurance depend on the actual career. Insurance sales agents must be communicators who are good with people. Moreover, some agents, particularly those who sell life insurance, rely on commissions. For example, independent automobile insurance agents make 15 to 20 percent of each premium paid, according to a Wall Street Journal report from 2012. Therefore, sales agents need to be persuasive. Otherwise, people won’t buy insurance from them.
Insurance underwriters, while also needing good communication skills, don’t actually have to be people persons. Instead, they need to be able to ask the right questions and gather information, then sift out the important details to make a decision. Good underwriters are excellent decision-makers who can defend their choices. However, underwriting is a shrinking field thanks to greater automation that helps companies balance the risks and rewards of insuring others. The BLS expects there to be 6,500 fewer underwriting jobs in 2022 than there were in 2012, as humans evaluate software recommendation rather than making recommendations themselves. Therefore, new insurance underwriters must embrace technology and be able to use automated systems to increase their output speed.
Actuaries deal infrequently with customers. Instead, they are busy crunching numbers. They show high levels of numeracy and can think critically about those numbers to make justifiable decisions.
Claims adjusters, claims examiners and insurance investigators are the detectives of the industry. They ask incisive questions of claimants and evaluate their answers to make sure they withstand scrutiny. Adjusters bring negotiation skills to the table, as they must be able to match up the evidence they have accumulated with a compensation package that saves the insurance company money while being acceptable to the claimant.
Additionally, different credentials are available for different types of insurance careers. For example:
The Casualty Actuarial Society (CAS) certifies those in car insurance, home insurance, malpractice insurance and worker’s compensation insurance. The Society of Actuaries (SOA) certifies those in life insurance, health insurance and anything related to finance. To earn associate certification in either, actuaries must pass several exams, attend seminars and take online courses. They are then eligible to become fellows, with SOA fellows choosing from five specializations. The entire process can take six to nine years but is typically supported by employers. One type of actuary who must meet special requirements is a pension actuary, who must have a certain level of job experience and take two SOA exams to qualify for mandatory enrollment with the Joint Board for the Enrollment of Actuaries.
Though not required, certification is often expected of underwriters. A new underwriter can become an Associate in Commercial Underwriting or Associate in Personal Insurance by taking courses and exams. After three years, an underwriter may become a Chartered Property and Casualty Underwriter. All three certifications are offered by The Institutes; other organizations offer additional certifications.
State licensure is mandatory for insurance sales agents. Those involved in financial services are also well-served by seeking licenses and/or certifications from the Financial Industry Regulatory Authority, which allow them to sell specific investment vehicles.
Licensure requirements vary by state.
Most insurance professionals will need at minimum a computer and a calculator. Those who require higher education, namely actuaries and underwriters, rely on computer software to do much of the heavy lifting when it comes to producing and analyzing statistics.
Claims adjusters, insurance examiners and insurance investigators have several handy tools at their disposal. They may look at data recorders in onboard car computers, use measure markers when getting precise distances in the case of car accidents and, because they spend so much time in the field, carry data collection devices and handheld computers. In the office they also rely on software, specifically:
Insurance sales agents maintain contact with potential customers, so they rely on customer relationship management software, such as Allied Financial Software Act4Advisors or Insurance Technologies ForeSight Enterprise, but they must also utilize financial analysis software so they do not waste time making sales to people who will not be approved. Cygnus Software IncomeMax is one example.
Insurance claims and policy processing clerks use more standardized office software as their roles are more administrative and less specific. They typically use billing software, user databases and Microsoft Office.
In 2005, just under 765,000 people were employed directly by life, health and medical insurance companies. A decade later, over 838,000 were. With the passage of the Affordable Care Act, insurers are anticipated to hire even more people as they determine the effects of the law and where to set rates. Moreover, with 88% of Americans now having some form of health insurance, according to a 2015 Gallup poll, companies must hire more support staff.
The upward growth trends are not industry-wide. For example, property and casualty insurers, who have seen fewer regulatory and legal shakeups, shed 56,000 jobs between 2005 and 2014, as insurance underwriters lost out on jobs to computer automation. Regardless, the entire industry grew 5 percent in the same time period and seems poised for greater growth. Indeed, BLS data shows that as of November 2015, the industry had posted job gains every month since April 2013.
In the insurance industry, actuaries have the greatest potential for high salaries, but there are two things the numbers don’t show. First, there are less than 22,000 of them in the United States, meaning that it is one of the more difficult insurance jobs to break into. Second, insurance sales agents, who make half the average salary of actuaries, have tremendous potential for commissions based on their sales, which is not reflected in their salaries.
The insurance industry is just one portion of the larger finance sector, which is part of an even larger super sector that also incorporates real estate, according to the BLS classification. The industry has close ties to banking because for businesses and individuals, insuring assets is one part of a larger strategy for financial health. Therefore, people who are interested in statistics and risk assessment do not necessarily have to go into insurance. They may find what they are looking for in the banking sector. For comparison, several banking and real estate careers are compared to the insurance careers already discussed. These careers call upon many of the same skills. For example, real estate appraisers put values on items just as claims adjusters do, real estate brokers sell houses just as sales agents sell insurance, and loan officers evaluate the risk of default just as insurance underwriters evaluate the risk of providing insurance to an individual. The salary figures below are based on 2014 estimates from BLS. The growth estimates are for 2012 to 2022.
Source: Bureau of Labor Statistics