Insurance Agent and Broker
Insurance Agent and Broker
Education and Training College preferred; training plus license mandatory
Salary Median—$41,720 per year
Employment Outlook Fair
Definition and Nature of the Work
Insurance agents are hired by insurance companies to find customers and sell them insurance policies. The three main categories of insurance are life, health, and property-liability. Each protects its policyholder against possible financial loss. Life insurance pays the holder's family a certain sum in the event of the holder's death. Health insurance protects policyholders against large medical bills covered under the policy if the need should arise. Property-liability insurance, sometimes called casualty insurance, covers damage to or theft of property that may occur, for instance, as the result of an auto crash, a fire, or a home burglary.
Insurance agents assist their clients, who may be individuals or companies, in selecting the right policy for their needs. The agents explain and write the policies, which are agreements between the client and the insurance company, and help their clients fill out the necessary forms to obtain the desired insurance. Agents who sell life insurance may schedule physical examinations for clients. Agents must make themselves available to answer questions and to assist clients in filing claims.
Agents work in several different ways. They may work for only one company, or they may act as independent agents who are hired by two or more insurance firms. Agents often specialize in a certain type of insurance and may sell strictly to individuals or to businesses.
Insurance brokers do very much the same kind of work that agents do. Brokers, however, do not work for specific insurance companies. They place clients with the insurance companies that are most suitable for the clients' needs.
Because of changes in the financial services industry, many insurance agents and brokers now offer a number of financial-planning services. Some are also licensed to sell securities, such as mutual funds or annuities.
Education and Training Requirements
Almost all insurance agents and brokers have finished high school and most have college training. Most insurance companies and independent agencies hire only college graduates. Courses in business, mathematics, accounting, and economics are helpful. Some colleges actually offer courses in insurance. Proficiency in computer business applications is also important because they are used to provide financial information and calculate premiums (the amount paid by a client—usually each month or every six months—for insurance coverage). All agents and brokers must be licensed by the state in which they work. To obtain a license, candidates must pass a written test. Agents and brokers who plan to sell mutual funds and other securities must obtain a separate state license.
The insurance business offers a wide variety of training courses. Many insurance companies and agencies offer classes to help trainees study for the licensing test. Once licensed, new insurance agents and brokers learn by observing experienced workers, but training does not stop after licensing. There are many conferences and further courses to help insurance agents and brokers stay up-to-date on the latest trends in their field. In fact, insurance companies and agencies usually encourage and help their employees further their education on topics such as tax law. These courses also help with advancement. As the number of financial products being offered increases, employers are placing a greater emphasis on higher education.
Getting the Job
Probably the best way to enter the insurance field is to talk to agents and brokers in several different firms. Because there are so many directions a career in this field can take, it is very helpful to seek advice from the experts before making any definite decisions. Interested individuals should also find out how to get a license.
Once prospective agents or brokers decide on a particular area and type of position in the field, they should apply directly to insurance companies, agencies, or brokerages that specialize in that type of insurance. Career sites on the Internet and ads in newspapers may also list openings for jobs with insurance agencies.
Advancement Possibilities and Employment Outlook
The insurance business offers many opportunities for advancement. Courses are given to new and experienced workers who want to improve their skills. Many of the courses qualify workers for advancement or serve as a sign of achievement. After further training, insurance agents can go on to positions as underwriters. Some agents become managers or agency heads; others start their own agencies or brokerages.
According to the U.S. Bureau of Labor Statistics, insurance agents and brokers held 400,000 jobs in 2004. Employment of insurance agents and brokers was expected to grow more slowly than the average for all occupations between 2004 and 2014. Insurance agencies and companies will likely be hiring fewer agents to cut costs, which have been rising steadily in the insurance industry for decades. Computers and the Internet are also allowing existing agents to handle greater numbers of sales and to find new clients more easily. Therefore, most jobs will result from the need to replace agents and brokers who retire or leave the field.
Working conditions vary with the type of insurance being sold. Life insurance agents and brokers, for example, need to be more sales oriented than workers who sell other kinds of insurance. Clients are more likely to see the need for health and property-liability insurance than for life insurance.
All agents and brokers spend much of their working time outside the office. Their workweeks include evenings and weekends and often extend beyond the standard forty hours. Because some agents and brokers work partly or completely on commission, they must work longer hours to earn higher pay. The job demands independence and responsibility. Insurance agents are very much on their own.
Earnings and Benefits
Because agents and brokers usually work on commission (a percentage of sales), their incomes vary widely. Those who work longer hours generally earn more. As a rule experienced workers earn much more than new agents or brokers. Most employers take this into account and pay new workers a base salary plus commission while they learn and build up their clientele. According to the Bureau of Labor Statistics, insurance agents and brokers earned a median annual salary of $41,720 in 2004. The top-paid 10 percent of workers in this field earned more than $108,800.
Where to Go for More Information
Insurance Information Institute
110 William St.
New York, NY 10038
National Association of Insurance Women
6528 E. 101st St., PMB #750
Tulsa, OK 74133
Property Casualty Insurers Association of America
2600 S. River Rd.
Des Plaines, IL 60018
Insurance agents can expect paid holidays and vacations, health insurance, and retirement plans. Agents who work entirely on commission may have fewer benefits. Self-employed agents and brokers must provide their own benefits.