Insurance Agents and Brokers Career Information
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Significant Points
· Despite slower than average growth, job opportunities should be good
for people with the right skills.
· Employers prefer to hire college graduates and persons with proven sales ability or success in other occupations.
· In addition to insurance policies, agents are beginning to sell more financial products such as mutual funds, retirement funds, and securities.
Nature of the Work
Most people have their first contact with
an insurance company through an insurance sales agent. These workers help individuals,
families, and businesses select insurance policies that provide the best protection
for their lives, health, and property. Insurance sales agents who work exclusively
for one insurance company are referred to as captive agents. Independent insurance
agents, or brokers, represent several companies and place insurance policies
for their clients with the company that offers the best rate and coverage. In
either case, agents prepare reports, maintain records, seek out new clients,
and, in the event of a loss, help policyholders settle insurance claims. Increasingly,
some may also offer their clients financial analysis or advice on ways they
can minimize risk.
Insurance sales agents sell one or more types of insurance, such as property and casualty, life, health, disability, and long-term care. Property and casualty insurance agents sell policies that protect individuals and businesses from financial loss resulting from automobile accidents, fire, theft, 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 claims.
Life insurance agents specialize in selling policies that pay beneficiaries when a policyholder dies. Depending on the policyholder's circumstances, a cash-value policy can be designed to provide retirement income, funds for the education of children, or other benefits. Life insurance agents also sell annuities that promise a retirement income. Health insurance agents sell health insurance policies that cover the costs of medical care and loss of income due to illness or injury. They may also sell dental insurance and short- and long-term disability insurance policies.
An increasing number of insurance sales agents offer comprehensive financial planning services to their clients, such as retirement planning, estate planning, or assistance in setting up pension plans for businesses. As a result, many insurance agents are involved in "cross-selling" or "total account development." Besides insurance, these agents may become licensed to sell mutual funds, variable annuities, and other securities. This is most common for life insurance agents who already sell annuities; however, property and casualty agents also sell financial products.
Technology has greatly impacted the insurance agency, making it much more efficient and giving the agent the ability to take on more clients. Agents' computers are now linked directly to the insurance companies via the Internet, making the tasks of obtaining price quotes and processing applications and service requests, faster and easier. Computers also allow agents to be better informed about new products that the insurance carriers may be offering.
The growth of the Internet in the insurance industry is gradually changing the relationship between the agent and client. In the past, agents devoted much of their time to marketing and selling products to new clients; however, this is changing. Increasingly, clients obtain insurance quotes from a company's website, then contact the company directly to purchase policies. This gives the client a more active role in selecting a policy at the best price, while reducing the amount of time agents spend actively seeking new clients. Because insurance sales agents also obtain many new accounts through referrals, it is important that agents maintain regular contact with their clients to ensure that their financial needs are being met. Developing a satisfied clientele who will recommend an agent's services to other potential customers is a key to success in this field.
Increasing competition in the insurance industry means that carriers and agents must find new ways to keep their clients satisfied. One solution is the increasing use of call centers, which usually are accessible to clients 24 hours a day, 7 days a week. Insurance carriers and sales agents are hiring customer service representatives to handle the routine tasks such as answering questions, making policy changes, processing claims, and selling more products to clients. This opportunity to cross-sell new products to clients will help agents' business grow. The use of call centers also allows agents to concentrate their efforts on seeking out new clients and maintaining relationships with old ones.
Working Conditions
Most insurance sales agents are based in
small offices, from which they contact clients and provide insurance policy
information. However, much of their time may be spent outside their
offices, traveling locally to meet with clients, close sales, or investigate
claims. Agents usually determine their own hours of work and often schedule
evening and weekend appointments for the convenience of clients. Although most
agents work a 40-hour week, some work 60 hours a week or longer. Commercial
sales agents, in particular, may meet with clients during business hours and
then spend evenings doing paperwork and preparing presentations to prospective
clients.
Insurance sales agents held about 400,000 jobs in 2009. Most insurance sales agents employed in wage and salary positions work for insurance agencies and brokerages. A decreasing number work directly for insurance carriers. Although most insurance agents specialize in life and health insurance or property and casualty insurance, a growing number of “multiline” agents sell all lines of insurance. A small number of agents work for banks and securities brokerages as a result of the increasing integration of finance and insurance industries. Approximately 1 out of 4 insurance sales agents is self-employed.
Insurance sales agents are employed throughout the country, but most work in or near large urban centers. Some are employed in the headquarters of insurance companies, but the majority work out of local offices or independent agencies.
Training, Qualifications, Adv.
For insurance agency jobs, most companies
and independent agencies prefer to hire college graduates-particularly those
who have majored in business or economics. A few hire high school graduates
with proven sales ability or who have been successful in other types of work.
In fact, many entrants to insurance
sales agent jobs transfer from other occupations. In selling commercial insurance,
technical experience in a field can be very beneficial in helping to sell policies
to those in the same profession. As a result, new agents tend to be older than
entrants in many other occupations.
College training may help agents grasp the technical aspects of insurance policies and the fundamentals and procedures of selling insurance. Many colleges and universities offer courses in insurance, and a few schools offer a bachelor's degree in insurance. College courses in finance, mathematics, accounting, economics, business law, marketing, and business administration enable insurance sales agents to understand how social and economic conditions relate to the insurance industry. Courses in psychology, sociology, and public speaking can prove useful in improving sales techniques. In addition, familiarity with computers and popular software packages has become very important, as computers provide instantaneous information on a wide variety of financial products and greatly improve agents' efficiency.
Insurance sales agents must obtain a license in the States where they plan to sell insurance. Separate licenses are required for agents to sell life and health insurance and property and casualty insurance. In most States, licenses are issued only to applicants who complete specified prelicensing courses and pass State examinations covering insurance fundamentals and State insurance laws.
A number of organizations offer professional designation programs, which certify expertise in specialties such as life, health, property, and casualty insurance, or financial consulting. Although these are voluntary, such programs assure 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 their designation.
Indeed, as the diversity of financial products sold by insurance agents increases, employers are placing greater emphasis on continuing professional education. It is important for insurance agents to keep up to date with issues concerning clients. Changes in tax laws, government benefits programs, and other State and Federal regulations can affect the insurance needs of clients and the way in which agents conduct business. Agents can enhance their selling skills and broaden their knowledge of insurance and other financial services by taking courses at colleges and universities and by attending institutes, conferences, and seminars sponsored by insurance organizations. Most States have mandatory continuing education requirements focusing on insurance laws, consumer protection, and the technical details of various insurance policies.
As the role of financial planners increases, many insurance agents are choosing to gain the proper licensing and certification to sell securities and other financial products. This includes passing an additional examination. Before agents can qualify as securities representatives, they must pass the General Securities Registered Representative Examination (Series 7 exam), administered by the National Association of Securities Dealers (NASD). To further demonstrate competency in the area of financial planning, many agents also find it worthwhile to obtain a Certified Financial Planner (CFP) or Chartered Financial Consultant (ChFC) designation.
Insurance sales agents should be flexible, enthusiastic, confident, disciplined, hardworking, willing to solve problems, and able to communicate effectively. They should be able to inspire customer confidence. Because they usually work without supervision, sales agents must be able to plan their time well and have the initiative to locate new clients.
An insurance sales agent who shows 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.
Future demand for insurance sales agents depends largely on the volume of sales of insurance and other financial products. While sales of life insurance are down, rising incomes and a concern for financial security during retirement are lifting sales of annuities, mutual funds, and other financial products sold by insurance agents. Sales of health and long-term care insurance also are expected to rise sharply as the population ages and as the law provides more people access to health insurance. In addition, a growing population will increase the demand for insurance for automobiles, homes, and high-priced valuables and equipment. As new businesses emerge and existing firms expand coverage, sales of commercial insurance also should increase, including coverage such as product liability, workers' compensation, employee benefits, and pollution liability insurance. Employment of agents will not keep up with the rising level of insurance sales, however. Many insurance companies are trying to contain costs. As a result, many are shedding their captive agents-those agents working directly for insurance carriers-and are relying more on independent agents or direct marketing through the mail, by phone, or on the Internet. Agents who incorporate new technology into their existing business will remain competitive. More clients are turning to the Internet first as a source of information. Those agents who use the Internet to market their products will reach a broader client base, and expand their business. But because most clients value their relationship with their agent, the Internet should not be a much of a threat to jobs. Many individuals prefer discussing their policies directly with their agents, rather than through a computer. Agents will face increased competition from traditional securities brokers and bankers as they begin to sell insurance policies. Because of increasing consolidation among insurance companies, banks, and brokerage firms and increasing demands from clients for more comprehensive financial planning, insurance sales agents will need to expand the products and services they offer. Agents who offer better customer service also will remain competitive. Call centers are the primary way companies and agents are offering better service because customers are demanding greater access to their policies. Insurance and investments are becoming more complex, and many people and businesses lack the time and expertise to buy insurance without the advice of an agent. Insurance agents who are knowledgeable about their products and sell multiple lines of insurance and other financial products will remain in demand. Additionally, agents who take advantage of direct mail and Internet resources to advertise and promote their products can reduce the time it takes to develop sales leads, allowing them to concentrate on following up on potential clients. Most individuals and businesses consider insurance a necessity, regardless of economic conditions. Therefore, agents are not likely to face unemployment because of a recession. Job Outlook
Although is expected among insurance agents through 2010, opportunities for agents will be favorable for persons with the right qualifications and skills. This includes flexible and ambitious people who enjoy competitive sales work, have excellent interpersonal skills, and have developed expertise in a wide range of insurance and financial services.
The median annual earnings of wage and salary insurance sales agents were $41,720 in May 2009. The middle 50 percent earned between $29,980 and $66,160. The lowest 10 percent had earnings of $23,170 or less, while the highest 10 percent earned more than $108,800. Median annual earnings in May 2009 in the two industries employing the largest number of insurance sales agents were $42,010 for insurance carriers, and $41,840 for agencies, brokerages, and other insurance related activities.
Many independent agents are paid by commission only, whereas sales workers who are employees of an agency or an insurance carrier may be paid in one of three ways—salary only, salary plus commission, or salary plus bonus. In general, commissions 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 on whether the transaction is a new policy or a renewal. Bonuses usually are awarded when agents meet their sales goals or when an agency meets its profit goals. Some agents involved with financial planning receive a fee for their services, rather than a commission.
Company-paid benefits to insurance sales agents usually include continuing education, training to qualify for licensing, group insurance plans, office space, and clerical support services. Some companies also may pay for automobile and transportation expenses, attendance 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 marketing and other expenses.
Other workers who provide or sell financial products or services include real estate brokers and sales agents; securities, commodities, and financial services sales agents; financial analysts and personal financial advisors; and financial managers. Occupations with similar sales duties include sales representatives, wholesale and manufacturing; customer service representatives, and advertising sales agents. Other occupations in the insurance industry include insurance underwriters and claims adjusters, examiners, and investigators. Related Occupations
Occupational information about insurance sales agents is available from the home office of many insurance companies. Information on State licensing requirements may be obtained from the department of insurance at any State capital. For information about insurance sales careers and training, contact: For information about health insurance sales careers, contact: For general information on the property and casualty field, contact: For information about professional designation programs, contact:Sources of Additional Information