A Career in the Insurance Industry

Insurance is one of the UK's most important service industries and as such it has achieved a pre-eminent position in the world's market employing approximately 250,000 people. It is also one of the UK's biggest invisible export earners, involving some of the most substantial funds in the world; over the last five years it has generated half of Britain's vital invisible earnings.

There are many different areas of specialism in the insurance world but all fall within two principle business factors: life and general insurance. Life is concerned with insuring people against premature death or permanent injury, also providing for the financial needs of individuals through savings and in retirement. Pensions and long term investments contracts fall within the life category. General insurance provides protection against damage to property, personal injury and liabilities - everything from motor and household insurance to risk protection for high cost installations such as oil risks or satellites.

A third major facet of the industry is reinsurance, whereby insurers spread their risk by taking on their own insurance against claims. This spreading of risks accounts for a large proportion of the business which comes into the UK every year and represents a growing area of insurance activity.

The industry offers a wide diversity of business experience and career opportunities from underwriting, broking and claims through to investment analysis, financial advice and the whole panoply of business support such as information technology, marketing, personnel and corporate management. For professional variety, opportunity for international involvement and scope for rapid career progression, insurance is the business.

The establishment of the single European markets means that UK insurers are having to cope with new business conditions, to ensure that they increase their share of the European business and respond effectively to the increased competition from overseas insurers within the UK. In addition, insurance knowledge is increasingly required in non-insurance organisations such as building societies and banks, which now market insurance products.

All of these moves point towards a future in which the importance of professional knowledge, expertise and conduct will be more clearly required and are the goals to which the Chartered Insurance Institute and its members are committed.


The Chartered Institute is the leading professional and educational body for the insurance industry and offers a comprehensive range of qualifications suitable for everyone engaged in insurance or financial services. The courses have been designed to provide an appropriate, recognised qualification at every step of your career - from the most basic level right through to Fellowship of the Institute.

Progression to Fellowship of the Institute is achieved by providing evidence of continuing professional development, over a minimum period of three years together with a 3,500 word dissertation or project report. Alternatively you may opt to submit a portfolio of published work or evidence of further professional qualifications.

Insurance is a multidisciplinary profession, calling for people with all kinds of talents, skills and knowledge. Communication skills, intellectual breadth and the ability to make quick decisions are paramount. A degree in any discipline is generally acceptable. However, certain subjects such as economics, law, mathematics, statistics, business studies and languages can be particularly useful.

Many universities offer degree and diploma courses which include insurance studies within them and indeed there is now a degree in Insurance studies available. Other disciplines readily acceptable to the industry include Risk Management and Actuarial Studies.

The large insurance companies and specialist firms, who support the industry, are consistently on the lookout for bright graduates to train in different functions. Many have formal graduate recruitment programmes with highly sophisticated training support.

If you would like to know more about the industry and how it works, contact the Careers Information Service of the Chartered Insurance Institute. We produce a wide range of booklets and leaflets describing career opportunities at different academic entry levels and giving detailed information about the insurance and financial planning qualifications awarded by the Institute. If you would like to obtain copies of these publications or to obtain advice on any aspect of insurance employment, please contact the:


The Chartered Insurance Institute

Address: 42-48 High Road, South Woodford, London E18 2JP
Tel: +44 (0)20 8989 8464
Fax:+44 (0)20 8530 3052

Email: customer.serv@cii.co.uk

Web: www.insurancecareers.cii.co.uk/index.html

Producer used reinsurance companies - Hugh`s views

Producer used reinsurance companies - Hugh`s views

Hugh Rosenbaum reevaluates his suspicion of PORCS and determines that in some cases they definitely have a role to play Aptly named PORCS stands for producer-owned reinsurance companies. Some include them in the count of captive insurance companies (I never did). In the past I have inveighed against them as being parasites on the main stem of the insurance business and imposters in the listings of captive insurance companies. The current hard market conditions and fronting problems have brought a number of new inquiries from agents wanting to do something about the capacity problem, or the fronting problem, by starting something on their own. The kind of questions they are asking me is not how much can we make?, but will it help me find more capacity, fronting or coverage? Maybe it's time for me to re-evaluate some PORCS, or agency-owned reinsurers. Where value is added in the form of underwriting, they might well have a role to play. Underwriting There are some insurance agents that I would characterize as good underwriters, to differentiate them from the more basic order-takers and salesmen. From my point of view, underwriting is essentially: - Knowing a good risk from a bad one in other words, knowing when to reject a prospect. This usually means a thorough grounding in the business and operations of the prospect, with emphasis on whether it is well managed, well regarded and has at least some aspects of good risk management - Knowing how to interpret the information provided, and combine it with proprietary information, or experience to know whether good risks are worth further study because they are ˜special' - Knowing how to rate those good risks in such a way that the rating is acceptable to the buyer, acceptable to a reinsurer and, in the captive arena, acceptable to the other participants in a pooled-risk venture Those insurance agents who do the underwriting for their insurance carriers are in a position to deliver profits or losses to their carriers over time. The good ones maintain profitable books, and are rewarded with high commissions, profit commissions and performance bonuses. In my view, if that's what keeps the insurers willing to write the business, solvent and especially if it keeps the insureds covered, then these agents are providing a valuable service. I can even swallow the 50 to 60 per cent expense ratios that all this sometimes results in, for some kinds of labour-intensive program business, if hard-market conditions are being mitigated by the agent as underwriter. Underwriting, in other words, is worth a lot and its main value is in what doesn't happen, meaning bad risks accepted or insurers not being able to meet their obligations. Its secondary value is in what does happen in the form of lower loss ratios. It is clear to me that part of this underwriting service, or value-added to it, is doing the same for the insurer verifying its solvency and statutory standing as well as keeping an eye and ear on the claims and legal departments to understand trends or tendencies that could lead to sell-out, merger, or even liquidation. And being willing to do something for the client group of insureds before these things happen. Good underwriters, if insurers, are known to switch blocks of their business, and not just for reasons of higher commissions. Rewarding underwriters In my view, the underwriter ought to be the one rewarded most for the kind of business we are talking about. The capital provider, sometimes erroneously referred to as the ultimate risk-taker, provides the financing for the pool of risks, but the underwriter provides the judgement, the brainpower, and sometimes the basis for business continuity of the group of insureds. That is more valuable on the buyer's side than the financing, or spread-loss pooling provided by the insurers. What strikes me as a shame is that the agents as underwriters are usually rewarded in the form of commissions or percentages, rather than on the basis of a share in the book of business. Under the percentages system there is a reward for good results, and no reward for bad results but no penalty, either. That kind of situation creates one kind of motivation to succeed, one that is constantly under threat of short-term interpretation of the long-term result. Wouldn't it be more logical for the underwriter agents to have an equity stake in the book of business, which means they would share in the downside as well as the upside? Time and again, I have seen first-hand how this kind of reward coupled with potential penalties creates a better kind of motivation to succeed over the long term, and dampens short-term enthusiasms or bright ideas. So the points I add to an inquiring agent about starting a new PORC include: - Is your agency good at underwriting the book of business they send to their carriers? Do they really know about the carriers? - If so, are you willing to give up some of your commissions in exchange for some of the equity in the book of business? - Are the other agents you are thinking of joint-venturing with equally capable and willing to participate in this longer-term venture? The bigger picture I also think there is a bigger issue to be put on the table, here. That is the issue of the credibility of the agency that has some ˜skin in the game' when they approach carriers, reinsurers, or even large potential clients. Which proposal looks better to you the one backed by a discussion of the growing numbers of clients and millions of dollars of premiums written over the past five years? Or the one backed by a disclosure that the agency has a 20 per cent stake in the underlying insurance, which has demonstrated a conservative loss ratio over the past five years? In these times of hard markets, those agents, and groups of agents, who have some of their own underwriting equity ought, in my view, to do better than the simple salesmen.

Source: http://captiveandart.com//fullitem.aspx?id=76779

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UNDERWRITING (INSURANCE)

UNDER WRITING'S FOUR BASIC FUNCTIONS
FURTHER READING:

In the insurance industry, the practice of underwriting refers to the process of accepting or rejecting risks. It is the very heart of insurance and is the first step taken by an insurance company to generate premiums. Originally, insurance and underwriting were synonymous. That is, underwriting referred to the operation of the insurance business. As the insurance industry developed, underwriting took on a more specialized meaning.

In the early days insurance was more personal than it is today. A contract was drawn up between a property owner and a second party, who was willing to insure the specified property, or between the insured and the insurer. The contract specified the terms under which the property would be insured. The property owner placed his name at the top of the contract, stating that he was the owner of the property and beneficiary of the contract if the property was subsequently damaged. The other party, who guaranteed the contract and was the insurer, signed his name below, at the bottom of the contract. Literally, he "underwrote" the contract.

An underwriter is the person who decides whether or not to insure risks for which applications have been submitted. The underwriter's task is to evaluate a risk, estimate the potential exposure, determine the likelihood of loss, then make a decision whether or not to accept the application for insurance.

The term "underwriter" developed in the early days of marine insurance. It was common practice for individuals seeking insurance for a ship and its cargo to meet with those desiring to write such insurance in coffeehouses. A person seeking insurance for his ship and its cargo would bring a paper describing the ship, its contents, crew, and destination to the coffeehouse. The paper would circulate, with each individual who wished to assume some of the obligation signing his name at the bottom and indicating how much exposure he was willing to assume. An agreed-upon rate and terms were also included in the paper. Since these people signed their named under the description of the risk, they became known as underwriters.

As insurers changed from individual to companies, signatures on insurance contracts became those of company officers. The term underwriter continued to be used in a more restrictive sense; it applied only to the person who performed the process of selecting risks and determining the terms of insurance. Risk selection and determination of policy terms continue to be the basic duties of underwriters today.

Underwriters work for insurance companies. In addition to on-the-job training, they may earn an Associate in Underwriting designation from the Insurance Institute of America. In the life insurance segment, underwriters may enter a program of study that leads to the designation of Chartered Life Underwriter (CLU). Most CLU's are engaged in some aspect of insurance sales as well. In the property and casualty insurance segment, underwriters may work toward the designation of Chartered Property Casualty Underwriter (CPCU).

UNDER WRITING'S FOUR BASIC
FUNCTIONS

The process of underwriting involves four basic functions: 1) selection of risks, 2) classification and rating, 3) policy forms, and 4) retention and reinsurance. By performing these four functions the underwriter increases the possibility of securing a safe and profitable distribution of risks.

RISK SELECTION.

In this step the underwriter decides whether or not to accept a particular risk. It involves securing factual information from the applicant, evaluating that information, and deciding on a course of action. The underwriter is typically aided by a list of acceptable and prohibited risks.

CLASSIFICATION AND RATING.

Once the risk has been accepted, the underwriter then classifies and rates the policy. Several tentative classifications are usually assigned before a final decision on classifying the risk is reached. The purpose of using classifications is to separate risks into homogeneous groups to which rates can be assigned. Insurers may have their own classification and rating system, or they may obtain a system from a rating bureau.

POLICY FORMS.

After determining the acceptability of an applicant and assigning the proper classification and rating, the underwriter is ready to issue an insurance policy. The underwriter must be familiar with the different types of policies available as well as be able to modify the form to fit the needs of the applicant.

The first three underwriting functions—risk selection, classification and rating, and policy selection—are interdependent. That is, the underwriter determines that a certain risk is acceptable when specified rates and forms are used. The underwriter also performs a fourth separate function on every risk before the underwriting is complete: reinsurance.

RETENTION AND REINSURANCE.

Reinsurance involves protecting the insurance company against a certain portion of potential losses. Every risk presents the possibility of loss that will equal or exceed the policy limits. It is up to the underwriter to protect his or her company from undue financial strain. The underwriter does this by retaining only a certain portion of the risk and securing reinsurance for the remainder of the risk.

[David P. Bianco]

FURTHER READING:

Dearborn Financial Institute Staff. Introduction to Life Underwriting. 11 th edition. Chicago: Dearborn Financial Publishing, 1998.

Morgan, Joseph F. Underwriting Commercial Property. 2nd ed. Malvern, PA: Insurance Institute of America, 1997.

Randall, Everett. Introduction to Underwriting. 2nd ed. Malvern, PA: Insurance Institute of America, 1994.

Ensure A Rewarding Career In Insurance

Insurance careers may be the best kept employment secret in the world of finance. The insurance industry relies heavily on the work of financial professionals.

By Robert Elsenpeter, Star Tribune Sales and Marketing

The thought of insurance industry careers may just conjure images of an agent or someone mailing out the yearly calendars. But it may be that very stereotype that keeps people away from the insurance industry.

The fact of the matter is that there are great jobs in insurance, especially for those with finance and accounting backgrounds. In fact, insurance careers may be the best kept employment secret in the world of finance. The insurance industry relies heavily on the work of financial professionals.

On its website, the Insurance Information Institute (III)(www.iii.org) writes, "Insurance companies act as financial intermediaries in that they invest the premiums they collect for providing this service."The U.S. Bureau of Labor Statistics (BLS) notes that insurance carriers and other financial institutions, such as banks and securities firms, are able to sell one another's products. As a result, more insurance carriers now sell financial products such as securities, mutual funds and retirement plans.

What does this mean for finance professionals? The insurance industry needs them.

Need

"We really are challenged to attract financial talent," says Jim Kwapick, regional vice president for Robert Half International and Accountemps. "It's very challenging."

Kwapick attributes the increased need to a strong employment market and an increased demand for finance professionals.

As insurance companies evolve, they are adding financial services to their offerings, resulting in more jobs, says Carolyn Gorman, vice president of the III.

"There's also been a wave of retirements and more to come," adds Gorman. "Insurance companies are looking to replace those who are retiring."

In fact, within the insurance industry, the BLS forecasts a 14 percent increase in accountants and auditors by 2014. Financial analyst positions are expected to rise by 12.6 percent.

For recent graduates, the insurance industry can be an excellent place to start.

"This field provides the basis for understanding business," says Kwapick. "A lot of people start as an accountant or in finance and move to CFO, and then COO or CEO."

Opportunities

There are all sorts of careers in the insurance industry, from agents to investigators to accountants. "Almost anyone with a good education will find a good place in the insurance industry," says Gorman.

While working behind the scenes might seem the norm at an insurer, those with finance backgrounds might be interested in bringing their talents to agent work.

Agents' careers are being somewhat threatened by the prevalence of computer technology, which allows customers to buy directly from a company and forgo a visit to an agent. But agents are not dispensable; they are especially necessary to help with intricate policies.

"Some policies are extremely complex," says Gorman. "There's no way you can provide the amount of knowledge for a complicated policy online."

So why is the insurance industry such a dark horse when it comes to the perception of employment opportunities?

"I don't know if there's the sex appeal with the insurance industry," says Kwapick.

 

Source: http://www.startribune.com/1759/story/819300.html

How To Start a Career in Insurance

By Tonya Sandersfeld
Sunday, November 12, 2006

Starting a career in the insurance field can be very rewarding!  There are so many different positions available in insurance that it's possible to find one to suit everyone.  If you are a people person, you can become a sales agent.  If you are not a people person, you can work behind the scenes to process claims.  If you are good with computers, you can work as an adjuster or provide clerical support.  If not, you can field clients' questions at a call center.  However, the most successful candidates in the insurance field are good with numbers, from actuaries to investigators to managers.  In addition, the U.S. government has recently passed a law which allows all financial institutions to sell all financial products.  In other words, insurance agencies can sell mutual funds, banks can sell retirement plans, and financial analysts can sell insurance.  So, having an above-average talent for math is now even more important!

1. Obtain a proper education.  The first step in becoming an insurance professional is to become educated in the insurance field.  Some colleges offer a bachelor's degree in insurance, but more often, insurance agents will obtain a degree in a related field, such as economics, finance, accounting, marketing or mathematics.  Getting a college degree is not a requirement for starting an insurance career, but it can give your career a big jump-start.  However, if you are good in math, are a born salesperson, and have at least a high-school diploma, you can still become an insurance professional.
   
   
2. Become licensed.  It is necessary to become licensed in insurance for the state in which you intend to work.  Depending upon the state, licensure may consist of completing a series of classes satisfactorily, attending a short licensure program, or studying for and taking the licensure exam on your own.  To determine the exact requirements for the state in which you live or intend to work, consult your state government's website.  No matter which state you live in, you will need to become licensed for each type of insurance that you intend to sell - property/casualty and life/health are the two most common areas of licensure.
   
   
3. Fulfill continuing education requirements.  Even after you have become licensed to sell insurance, you will need to continue taking classes to meet the continuing education requirements for your state.  The insurance field changes quickly, so it's vital to keep up with changing laws and codes.
   
   
4. Determine if you would like to join an agency or work independently.  Most insurance agents work either for an insurance agency which employs anywhere from two to one hundred agents; or they start their own business.  The advantages to owning your own business are obvious - you are your own boss, and you can set your own policies and procedures, as well as your own hours in many cases.  However, you will be getting paid solely by commission, which can be difficult when you're building a business.  Typically, an insurance agent gets a commission of between three percent and ten percent annually on each policy that he sells.  If you have only a few clients in the beginning, it can be difficult to sustain your business.  Insurance agencies will usually pay their agents a salary in addition to their commissions.
   
   
5. Find a job!  Once you've become licensed to sell insurance and decided which insurance career path to pursue, it's a simple matter to find available jobs.  All of the usual websites, such as Monster and CareerBuilder, can steer you toward open insurance positions.  You can also try looking in the classifieds.  Another useful method for job-hunting in the insurance field is to go to the website of an insurance carrier, such as American Family, State Farm or Allstate.  They will have a link to a career opportunities page, which can provide you with many job possibilities, from entry level all the way up to managerial positions.
   
   

If you invest just a little bit of time in your insurance education, you're sure to find yourself on a rewarding, exciting career path.  And if by chance, the insurance field isn't for you, it can be a great starting place for a variety of other finance-related fields!

 

Source: http://www.howtodothings.com/careers/a4007-how-to-start-a-career-in-insurance.html

Careers in Insurance: Underwriting

Underwriting

• Entry requirements
• What you might do
• Training and professional qualifications
• Rewards
• Prospects
• Useful links

Underwriters assess risks and decide whether to accept applications for insurance cover - and on what terms. This is a core skill because it is the essence of insurance - carried out well, it will minimise losses for a company and help it to make a profit. Consequently, underwriting capability has massive influence on the competitiveness of insurance companies.

Underwriters, who often specialise in one type of insurance, determine policy terms and conditions, and calculate premiums based on risk assessment, statistical and background information - looking at the potential for a loss based on their experience of a particular trade or industry.

 

Entry requirements

This area of work is open to all graduates, with preference given to degrees in subjects like business/management, economics, law and mathematics, or in relevant science or engineering disciplines. Some larger insurance companies include underwriting as part of general graduate management training schemes.

 

What you might do

Underwriting work is largely about relationship building and it demands close attention to detail. You are likely to be involved in networking to get things done, gathering and assessing information, studying proposals and, for any given scenario, calculating possible risk, weighing up the likelihood of a claim being made and in what timeframe.

Underwriters compute results to determine the cost of insurance and decide whether the risk is viable. You might also find yourself liaising with specialists, negotiating terms with policyholders or brokers, specifying conditions for certain types of cover, and drawing up policies and contracts.

 

Training and professional qualifications

Graduate training schemes for underwriters typically last for around two years and are often followed by another two or three years' training in a specialist area of risk.

Most training tends to be on the job, working alongside experienced colleagues and learning about different departments and about accounting, claims and investment functions. Some employers may ask you to complete Chartered Insurance Institute (CII) professional examinations as part of your training. Accomplished through distance learning, evening classes or day release, reaching CII associateship level usually takes 2-3 years.

Professional underwriters (not to be confused with underwriter members) working at Lloyd's insurance market must pass Lloyds' own tests. Study for this is provided by in-house and external courses through the CII.

 

Rewards

The typical salary for a new graduate entrant varies from £16,000 - £20,000, increasing with substantial experience to £40,000 - £100,000.

Professional underwriters at Lloyd's of London, who are different from 'underwriter members', can earn over £300,000.

 

Prospects

Movement into other core areas of insurance - for example risk management, claims or broking - is quite common for experienced underwriters, whose broad experience also gives them scope for general management roles.

Alternatively, you could choose to move into reinsurance to deal with very complex cases and high levels of risk, or progress into a specialist field, such as marine or aviation insurance. If you speak one or more foreign languages, there are also possibilities to work abroad.

Source: http://www.insurancecareers.cii.co.uk/2.5.underwriting.html

Useful links

Chartered Insurance Institute (CII)
42-48 High Road, South Woodford, London E18 2JP
Tel: 020 8989 8464
www.cii.co.uk/

Financial Services Authority (FSA)
25 The North Colonnade, Canary Wharf, London E14 5HS
Tel: 020 7066 1000
www.fsa.gov.uk

The International Underwriting Association of London (IUA)
London Underwriting Centre, 3 Minster Court, Mincing Lane, London EC3R 7DD
Tel: 020 7617 4444
www.iua.co.uk/

Lloyd's of London
One Lime Street, London EC3M 7HA
Tel: 020 7327 1000
www.lloyds.com