“No matter what you love to do, we have a place for you.”
— Teresa Sheppard, CIC, CISR, AAI, ACSR, CPIW, AIS, and 2014 OCSR National Award Winner
According to the U.S. Department of Labor, the U.S. insurance industry provided over 2.3 million jobs to the economy in 2013. These jobs are diverse, ranging from computer programmers and nurses to industry-specific roles like insurance agents, brokers, risk managers, underwriters, and claims adjusters. The organizations providing these jobs are equally varied, from one-person entrepreneurial ventures to global corporations.
Few people are aware of the size of the insurance and risk management industry and the extraordinary impact it has on state, local, and national economies. Insurers fuel the economy by investing the funds they collect for providing insurance protection. The insurance industry held $7.0 trillion in financial assets in 2012, with $1.4 trillion of that coming from property/casualty insurers and $5.6 trillion from life insurers, according to data from the U.S. Federal Reserve Flow of Funds.
The Occupational Outlook Handbook anticipates that many of the key industry jobs will grow through 2020. A few trends should aid job growth: increased lifespan, baby boomer retirement, technology advancement, and climate change.
Americans are living longer and retiring later, which means people will need increased financial protection and healthcare services. The current retiring generation – the "baby boomers" — are those born between 1946 and 1964 and who comprise 24% of the U.S. population. In 2011, the oldest baby boomers turned 65 (the retirement age goal for many U.S. workers). However, Gallup survey trends show that the percentage of workers who are expecting to retire later than age 65 has risen from 14 percent in 1995 to 37 percent in 2013. In 2014-2015, the oldest baby boomers are approaching 70. We are now just beginning to see baby boomers retire at the expected rate. In fact, it is estimated that 10,000 baby boomers are retiring each day.
Working in tandem with life extension is technological advancement. Advances in technology bring all kinds of benefits to society like life extension. However, new technology means new risks. In this connected world, cyber risk is on the rise. We are in constant need of new risk management strategies and insurance products to minimize damaging effects, and protect entrepreneurs so they feel secure to develop the next generation of technological marvels.
Globally, we are experiencing increased frequency and severity of natural disasters due to climate changes. Both businesses and individuals will need additional risk management and insurance services and products to minimize the damaging effects of storms, water/drought, crop failures, business interruption, etc. One of the primary purposes of insurance is to stimulate those who participate in the economy to take risks and produce goods and services without the paralyzing fear that an unfortunate turn of events could leave them destitute or unable to function.
At its core, the goal of the industry is to secure the physical, mental, and financial well being of families, individuals, and businesses through effectively managing risks.
Risk management is the process of managing the uncertainty of exposures that affect (good or bad) an individual or organization, including our health, safety, and financial well-being as they go about living and conducting business. The goal of risk management is to decrease the probability of loss (the bad stuff) and maximize the upside of any uncertainty (the good stuff).
The term "risk management" may be a bit confusing because it refers both to a process and to a particular career path. Most people called "risk managers" do not sell insurance; instead, they provide services and use insurance as a tool for managing risks. However, many professionals who sell insurance have risk management designations such as the CRM (Certified Risk Manager) and use risk management strategies with their clients to help them reduce losses, which increases profits and quality of life for the businesses and/or families the insurance professional serves.
Insurance is a risk management strategy used to transfer financial risks from one party to another by means of a formal written agreement called an insurance policy. The party who has the insurance is called the "policyholder" or the "client." Insurance companies, in exchange for regular premium payments from the policyholder, agree to for losses associated with the risks that are covered by the insurance policy.
Though there are many specialized insurance policies available to protect clients against all kinds of risks, insurance can be broadly classified into three types:
The insurance and risk management industry market is like many other markets that distribute goods and services. There is a buyer (Client/policyholder) and a retailer (Retail Insurance Agencies and Brokerages) that sells the product directly to the client. There are wholesalers (wholesale brokers) that sell specialized products to retailers. There is a company that makes the products (Insurance Company), and a layer of supplier businesses that provide resources, services and governance to the market (Industry Service Providers).
Following are the three common pathways through the market to purchase an insurance policy, starting from the perspective of the client.
Clients have a need for personal or business protection and want to buy insurance policies (products) and/or insurance services. Clients may be either individuals and families (personal insurance clients) or businesses of all kinds and sizes (commercial insurance).
Clients have two routes to purchase insurance through the market:
Through a retail insurance agent or broker (retail agency or brokerage). If the client's risk is fairly common — not too large or specialized — the retail agent will seek coverage from one of insurance companies with whom the agency has a contract to sell insurance products. However, if the risk is very large, complex, or specialized, the agent may turn to a wholesaler who specializes in insuring that type or magnitude of risk.
Clients may also purchase some types of insurance directly from an insurance company. In this case, the insurance agent is an employee of the insurance company.
Retail Agencies and Brokerages market insurance products and services directly to consumers (clients). There are three types of agencies/brokerages:
Independently-owned agencies, meaning they can sell the products of multiple insurance companies, and they operate independent of any single insurance company. Independently-owned agencies typically have contracts with 10 or more insurance companies who have authorized them as agents to sell their products.
Brokerages may sell products from any company that is willing to work with brokers on a risk-by-risk basis. The broker technically works for the client, helping them chose the best insurance option. Brokers are not agents of a specific insurance company.
"Exclusive" agencies operate a little like an insurance company "franchise" or a branch office. These small agencies, which may be partially owned by a principal agent, sell products offered by the "franchising" insurance company.
Wholesale brokers market insurance products to insurance retailers and may perform services for insurance companies, such as underwriting and claims administration. Wholesalers deal directly with insurance retailers only, not with retail clients. They tend to specialize in finding insurance coverage for large, complex or high-risk situations that require much knowledge and experience in order to accurately evaluate and manage the risks.
Insurance companies are responsible for developing, servicing, and selling insurance products through a variety of channels in the market – wholesale, retail, and direct sales. Insurance companies specialize by types of insurance sold (Property and Casualty, Life, Medical/Health).
Industry Service Providers may provide services to any of the industry players and draw expertise from a wide variety of other industries. Some examples include:
There are hundreds of different job types in the industry, especially when service providers are included. Any one of these jobs can be sorted into one of these six major occupational groups:
Of the 2.3 million insurance industry jobs identified in 2012, 1.4 million worked for insurance companies, including life, health and medical insurers (807,900 workers), property and casualty insurers (591,300 workers) and reinsurers (25,600 workers). The remaining 912,300 people worked for insurance agencies, brokers and other insurance-related enterprises.
As a whole, the insurance and risk management industry is centered on integrity, trust, and a genuine concern for the welfare of the client. After all, insurance is simply a promise to protect the client according to the terms of the policy. For all to succeed, honesty and trust are essential.
Insurance and risk management professionals tend to be ethical, stable, and reliable people.
This website is designed to help you find and/or develop a satisfying career in the insurance and risk management industry, whether you are new or are previously working in the industry. Including this introduction (Learn About the Industry), there are six sections to this website.
Create Your Career Plan: This section contains simple tools you can use to assess your interests, skills, and knowledge, and to develop a 9-point Personal Career Profile that will help you compare different occupations and business types to your own profile.
Explore Job Profiles: This section contains profiles for a number of industry jobs that are organized into six occupational groups. The same ten career factors used to create the personal career profile are applied to each job profile. Having the same 9 factors will facilitate matching the person to the job.
Compare Employer Types: Each of the major employer types is characterized and the typical jobs found in that employer type are listed. Web links to examples of employer types (The National Alliance business partners) are included.
Get a Practical Education: In order to truly protect and care for the client, you will need a practical professional education. You will likely need to be licensed to sell or service insurance by the state in which you are doing business. You may need a college education, and you will definitely need to pursue ongoing professional education to keep current with rapid industry changes. This section identifies National Alliance designation opportunities, educational program offerings, and sales training, and links to affiliated university insurance and risk management education programs.
Grow Your Network: Whether you are looking for work in the industry or trying to find new business prospects and colleagues who can help you professionally, a strong network is key! Check this section for networking tips and the names of industry supporting businesses, college programs, and insurance associations that can help advance your career.
The North American Industry Classification System (NAICS) at The Bureau of Labor Statistics (BLS) considers insurance a "Service-Providing" industry that specializes in "Financial Activities." Finance and Insurance are lumped together under NAICS 52.
Much industry relevant financial statistics can be found by searching the NAICS number and the BLS website www.bls.gov.