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Most people have their first contact with an insurance company through an insurance agent or broker. These professionals sell insurance policies to individuals and businesses to provide protection against loss. Insurance agents and brokers help individuals, families, and businesses select the policy that provides the best insurance protection for their lives and health, as well as for their automobiles, jewelry, personal valuables, furniture, household items, businesses, and other properties. Agents and brokers prepare reports, maintain records, and, in the event of a loss, help policyholders settle insurance claims. Specialists in group policies may help an employer provide employees the opportunity to buy insurance through payroll deductions. Insurance agents may work for one insurance company or as "independent agents" selling for several companies. Insurance brokers do not sell for a particular company, but place insurance policies for their clients with the company that offers the best rate and coverage.
Insurance agents sell one or more of several types of insurance: Life, property and casualty, health, disability, and long-term care. Life insurance agents specialize in selling policies that pay beneficiaries when a policyholder dies. Depending on the policyholder's circumstances, a whole-life policy can be designed to provide retirement income, funds for the education of children, or other benefits. Life insurance agents and brokers are sometimes referred to as life underwriters. (See the section on underwriters elsewhere in the Handbook.)
Property and casualty insurance agents and brokers sell policies that protect individuals and businesses from financial loss as a result of automobile accidents, fire or theft, tornados and storms, and other events that can damage property. For businesses, property and casualty insurance can also cover injured workers' compensation, product liability claims, or medical malpractice payments. Many life and property and casualty insurance agents also sell health insurance policies covering the costs of hospital and medical care, or loss of income due to illness or injury.
An increasing number of insurance agents and brokers offer comprehensive financial planning services to their clients, such as retirement planning counseling. As a result, many insurance agents and brokers are also licensed to sell mutual funds, annuities, and other securities. (See the section on securities and financial services sales representatives elsewhere in the Handbook.)
Since insurance sales agents obtain many new accounts through referrals, it is important that agents maintain regular contact with their clients to ensure their financial needs are being met as personal and business needs change. Developing a satisfied clientele who will recommend an agent's services to other potential customers is a key to success in this field.
Most insurance agents and brokers work in small offices, contacting clients and providing insurance policy information. However, most of their time is spent outside their offices, traveling locally to meet with clients and close sales. They generally arrange their own hours of work, and often schedule evening and weekend appointments for the convenience of clients. Although the majority of agents and brokers work no more than 40 hours a week, some work as much as 60 hours a week or even longer.
Insurance agents and brokers held about 418,000 jobs in 1994. About 30 percent of all agents and brokers were self-employed. While most insurance agents specialize in life insurance, a growing number of "multiline agents" offer life, property/casualty, and health and disability policies. The following tabulation shows the percent distribution of wage and salary jobs by industry.
Total 100 Insurance agents, brokers, and service 42 Life insurance carriers 38 Fire, marine, and casualty insurance carriers 12 Medical service and health insurance carriers 4 Pension funds and miscellaneous insurance carriers 1 Other industries 3Agents and brokers are employed in cities and towns throughout the country, but most work in or near large population centers. Some insurance agents and brokers are employed in the headquarters of insurance companies, but the majority work out of local company offices or independent agencies.
For jobs selling insurance, most companies and independent agencies prefer to hire college graduates-particularly those who have majored in business or economics. Some hire high school graduates with potential or proven sales ability or who have been successful in other types of work. In fact, most entrants to agent and broker jobs transfer from other occupations. As a result, agents and brokers tend to be older than the entrants of many other occupations.
College training may help agents or brokers grasp the technical aspects of insurance policies and the fundamentals and procedures of selling insurance. Many colleges and universities offer courses in insurance, and some schools offer a bachelor's degree in insurance. College courses in finance, mathematics, accounting, economics, business law, government, and business administration enable insurance agents or brokers to understand how social, marketing, and economic conditions relate to the insurance industry. It is important for insurance agents and brokers to keep up to date with issues concerning clients. Changes in tax laws, government benefit programs, and other State and Federal regulations can affect the insurance needs of clients and how agents conduct business. Courses in psychology, sociology, and public speaking can prove useful in improving sales techniques. In addition, some basic familiarity with computers and popular software packages is very important. The use of computers to provide instantaneous information on a wide variety of financial products has greatly improved agents' and brokers' efficiency and enabled them to devote more time to clients.
Insurance agents and brokers must obtain a license in the States where they plan to sell insurance. By law in most States, licenses are issued only to applicants who complete specified courses and then pass written examinations covering insurance fundamentals and the State insurance laws. Agents and brokers who plan to sell mutual funds and other securities must also obtain a separate securities license. New agents usually receive training in a classroom setting at pre-licensing schools conducted by state insurance agents associations or at the home offices of the insurance company. Often they attend company-sponsored classes to prepare for examinations. Others study on their own and accompany experienced agents when they call on prospective clients.
As the diversity of financial products sold by insurance agents and brokers increases, employers are placing greater emphasis on continuing professional education. Agents and brokers can hone their practical selling skills and broaden their knowledge of insurance and other financial services and planning by taking courses at colleges and universities and attending institutes, conferences, and seminars sponsored by insurance organizations. In 1995, 43 States had mandatory continuing education requirements focusing on insurance laws, consumer protection, and the technical details of various insurance policies.
A number of organizations offer professional designation programs which certify expertise in specialties such as life, health, or property and casualty insurance or financial consulting. Although voluntary, professional designation assures clients and employers that an agent has a thorough understanding of the relevant specialty. Many professional societies now require agents to commit to continuing education in order to retain the designation.
Insurance agents and brokers should be enthusiastic, outgoing, self-confident, disciplined, hard working, and able to communicate effectively. They should be able to inspire customer confidence. Some companies give personality tests to prospective employees because personality attributes are important in sales work. Because they usually work without supervision, agents and brokers must be able to plan their time well and have the initiative to locate new clients.
An insurance agent who shows sales ability and leadership may become a sales manager in a local office. A few advance to agency superintendent or executive positions. However, many who have built up a good clientele prefer to remain in sales work. Some, particularly in the property/casualty field, establish their own independent agencies or brokerage firms.
Employment of insurance agents and brokers is expected to change or grow more slowly than the average for all occupations through the year 2005. Most job openings are expected to result from the need to replace agents and brokers who leave the occupation. Many beginners find it difficult to establish a sufficiently large clientele in this highly competitive business; consequently, many eventually leave for other jobs. Opportunities should be best for ambitious people who enjoy sales work and who develop expertise in a wide range of insurance and financial services.
Future demand for agents and brokers depends on the volume of sales of insurance and other financial products. The growing number of working women should increase insurance sales. Rising incomes as well as a concern for financial security should stimulate sales of mutual funds, variable annuities, and other financial products and services. Growing demand for long-term health care and pension benefits for retirees-an increasing proportion of the population-should spur insurance sales. Sales of property and casualty insurance should rise as more people seek coverage not only for their homes, cars, and valuables, but also for expensive, advanced technology products such as home computers. As new businesses emerge and existing firms expand coverage, sales of commercial insurance should increase. In addition, complex types of commercial coverage such as product liability, workers' compensation, employee benefits, and pollution liability insurance are increasingly in demand.
Employment of agents and brokers will not keep pace with the rising level of insurance sales. Using computers, agents can access an abundance of information on potential clients, allowing them to save time and money by carefully crafting individually tailored plans. Consequently, agents will be able to handle a greater volume of sales. Many companies and agencies are diversifying their marketing techniques to include some direct mail or telephone sales, as well as other methods. These methods reduce the time agents must spend developing sales leads, allowing them to concentrate on following up on leads. In some cases, clients can purchase policies without a visit from an agent. Also, customer service representatives are increasingly assuming some sales functions, such as expanding accounts, and, occasionally, generating new accounts. Trends toward multiline agents, self-insurance, and group policies will also contribute to employment rising slower than the volume of insurance sales. In addition, large firms may increasingly hire risk managers to analyze their insurance needs and select the best policies.
Most individuals and businesses consider insurance a necessity, regardless of economic conditions. Therefore, agents are not likely to face unemployment because of a recession.
The median annual earnings of salaried insurance sales workers was $31,620 in 1994. The middle 50 percent earned between $22,050 and $46,380 a year. The lowest 10 percent earned $15,500 or less, while the top 10 percent earned over $69,990.
Most independent agents are paid on a commission only basis, whereas sales workers who are employees of an agency may be paid in one of three ways: Salary only, salary plus commission, or salary plus bonus. Commissions, however, are the most common form of compensation, especially for experienced agents. The amount of the commission depends on the type and amount of insurance sold, and whether the transaction is a new policy or a renewal. Bonuses are usually awarded when agents meet their sales goals or when an agency's profit goals are met. Some agents involved with financial planning receive an hourly fee for their services rather than a commission.
Company-paid benefits to sales agents generally include continuing education, paid licensing training, group insurance plans, and office space and support services. Some may pay for automobile and transportation expenses, attendence at conventions and meetings, promotion and marketing expenses, and retirement plans. Independent agents working for insurance agencies receive fewer benefits, but their commissions may be higher to help them pay for promotion and marketing expenses. They are typically responsible for their own travel and automobile expenses, life insurance, and retirement plans. In addition, all agents are legally responsible for any mistakes that they make, and independent agents must purchase their own insurance to cover damages from their errors and omissions.
Other workers who sell financial products or services include real estate agents and brokers, securities and financial services sales representatives, financial advisors, estate planning specialists, and manufacturers' sales workers.
General occupational information about insurance agents and brokers is available from the home office of many life and casualty insurance companies. Information on State licensing requirements may be obtained from the department of insurance at any State capital.
Information about a career as a life insurance agent also is available from:
National Association of Life Underwriters, 1922 F St. NW., Washington, DC 20006.
For information about insurance sales careers in independent agencies and brokerages, contact:
Independent Insurance Agents of America, 127 S. Peyton St., Alexandria, VA 22314.
National Association of Professional Insurance Agents, 400 N. Washington St., Alexandria, VA 22314.
For information about professional designation programs, contact:
American Society of CLU and ChFC, 270 Bryn Mawr Ave., Bryn Mawr, PA 19010-2195.
Society of Certified Insurance Counselors, 3630 North Hills Dr., Austin, TX 78731, or call 1-800-633-2165.
Society of Chartered Property and Casualty Underwriters, 720 Providence Rd., Malvern, PA 19355.
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