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Industry Overview
The insurance industry provides protection against financial losses resulting from a variety of perils. By purchasing insurance policies, individuals and businesses can receive reimbursement for losses due to car accidents, theft of property, and fire and storm damage; medical expenses; and loss of income due to disability or death.

Industry Organization
The insurance industry consists mainly of insurance carriers and insurance agencies and brokerages. In general, insurance carriers are large companies that provide insurance and assume the risks covered by the policy. Insurance agencies and brokerages sell insurance policies for the carriers. While some of agencies and brokerages are directly affiliated with a particular carrier and sell only that carrier's policies, many are independent and are thus free to market the policies of a variety of insurance carriers.

In addition to these two primary components, the insurance industry includes establishments that provide other insurance-related services, such as claims adjustment or third-party administration of insurance and pension funds. These other insurance industry establishments also include a number of independent organizations that provide a wide array of insurance-related services to carriers and their clients. One such service is the processing of claims forms for medical practitioners. Other services include loss prevention and risk management. Also, insurance companies sometimes hire independent claims adjusters to investigate accidents and claims for property damage and to assign a dollar estimate to the claim.

Insurance carriers assume the risk associated with annuities and insurance policies and assign premiums to be paid for the policies. In the policy, the carrier states the length and conditions of the agreement, exactly which losses it will provide compensation for, and how much will be awarded. The premium charged for the policy is based primarily on the amount to be awarded in case of loss and the likelihood that the insurance carrier will actually have to pay. In order to be able to compensate policyholders for their losses, insurance companies invest the money they receive in premiums, building up a portfolio of financial assets and income-producing real estate which can then be used to pay off any future claims that may be brought. There are two basic types of insurance carriers: primary and reinsurance. Primary carriers are responsible for the initial underwriting of insurance policies and annuities, while reinsurance carriers assume all or part of the risk associated with the existing insurance policies originally underwritten by other insurance carriers.

Primary insurance carriers offer a variety of insurance policies. Life insurance provides financial protection to beneficiaries—usually spouses and dependent children -- upon the death of the insured. Disability insurance supplies a preset income to an insured person who is unable to work due to injury or illness, and health insurance pays the expenses resulting from accidents and illness. An annuity (a contract or a group of contracts that furnishes a periodic income at regular intervals for a specified period) provides a steady income during retirement for the remainder of one's life. Property-casualty insurance protects against loss or damage to property resulting from hazards such as fire, theft, and natural disasters. Liability insurance protects policyholders from financial responsibility for injuries to others or for damage to other people's property. Most policies, such as automobile and homeowner's insurance, combine both property-casualty and liability coverage. Companies that underwrite this kind of insurance are called property-casualty carriers.

Some insurance policies cover groups of people, ranging from a few to thousands of individuals. These policies usually are issued to employers for the benefit of their employees or to unions, professional associations, or other membership organizations for the benefit of their members. Among the most common policies of this nature are group life and health plans. Insurance carriers also underwrite a variety of specialized types of insurance, such as real-estate title insurance, employee surety and fidelity bonding, and medical malpractice insurance.

Other organizations in the industry are formed by groups of insurance companies, to perform functions that would result in a duplication of effort if each company carried them out individually. For example, service organizations are supported by insurance companies to provide loss statistics, which the companies use to set their rates.

Recent Developments
The recent financial crisis has resulted in large losses for the insurance industry. Industry conditions in the near term remain tenuous, particularly as many companies will continue to experience declining revenues, investment losses, and credit rating downgrades, which can affect an insurer’s ability to repay debt by having to pay a higher interest rate. Additionally, insurance companies who were trading in credit default swaps and other risky instruments without sufficient hedging suffered especially hard, and some companies even became insolvent. Companies with prudent risk management strategies also suffered large losses, because most investment instruments owned by insurance companies experienced falling values as they were being sold or marked down as the stock market deteriorated in late 2008. Nonetheless, as insurers rebuild capital and adhere to stricter Federal regulations, the insurance industry is likely to stabilize.

Insurance carriers now sell products traditionally associated with other financial institutions, such as banks and securities firms. These products include securities, mutual funds, and various retirement plans. The Internet is an important tool for insurance carriers in reaching potential and existing customers. Carriers use the Internet to enable customers to access online account and billing information, submit claims, view insurance quotes, and purchase policies. In addition to individual carrier-sponsored Internet sites, several "lead-generating" sites have emerged. These sites allow potential customers to input information about their insurance policy needs. For a fee, the sites forward customer information to a number of insurance companies, which review the information and, if they decide to take on the policy, contact the customer with an offer. This practice gives consumers the freedom to accept the best rate.

Working Environment 
Many workers in the insurance industry -- especially those in administrative support positions -- work a 5-day, 40-hour week. Those in executive and managerial occupations often put in more than 40 hours. There are several occupations in the insurance industry where workers may work irregular hours outside of office settings. Those working in sales jobs need to be available for their clients at all times. This accommodation may result in these individuals working 50 to 60 hours per week. Also, call centers operate 24 hours a day, 7 days a week, so some of their employees must work evening and weekend shifts. The irregular business hours in the insurance industry provide some workers with the opportunity for part-time work. Part-time employees make up 8 percent of the workforce.

Insurance employees working in sales jobs often visit prospective and existing customers' homes and places of business to market new products and provide services. Others working in the industry may need to frequently leave the office to inspect damaged property, and at times can be away from home for days, traveling to the scene of a disaster -- such as a tornado, flood, or hurricane -- to work with affected policyholders and various government officials.

A small, but increasing, number of insurance employees spend most of their time on the telephone working in call centers, answering questions and providing information to prospective clients or current policyholders. These jobs may include selling insurance, taking claims information, or answering medical questions.

The insurance industry had about 2.3 million wage and salary jobs in 2008. Insurance carriers accounted for 61 percent of jobs, while insurance agencies, brokerages, and providers of other insurance-related services accounted for 39 percent of jobs.

The majority of establishments in the insurance industry were small; however, a few large establishments accounted for many of the jobs in this industry. Insurance carriers tend to be large establishments, often employing 250 or more workers, whereas agencies and brokerages tend to be much smaller, frequently employing fewer than 20 workers.

Many insurance carriers' home and regional offices are situated near large urban centers. Insurance workers who deal directly with the public are located throughout the country. Almost all of those working in sales work out of local company offices or independent agencies. Many others in the industry work for independent firms in small cities and towns throughout the country.

Degree Paths into this Industry
About 42 percent of insurance workers are in office and administrative support jobs such as those found in every industry (table 1). Many office and administrative support positions in the insurance industry, however, require skills and knowledge unique to the industry. About 29 percent of insurance workers are in management or business and financial operations occupations. About 17 percent of wage and salary employees in the industry are sales and related workers, selling policies to individuals and businesses. About 11 percent are in professional and related occupations, including many computer and mathematical science occupations.

About 29 percent of insurance workers are in management or business and financial operations occupations. About 17 percent of wage and salary employees in the industry are sales and related workers, selling policies to individuals and businesses. About 11 percent are in professional and related occupations, including many computer and mathematical science occupations.

Industry Forecast
Wage and salary employment in the insurance industry is projected to grow about 3 percent between 2008 and 2018, compared to the 11 percent growth projected for wage and salary employment in all industries combined. While demand for insurance is expected to rise, job growth will be limited by industry consolidation, corporate downsizing, productivity increases due to new technology, and increasing use of direct mail, telephone, and Internet sales. Additionally, the recent financial crisis has resulted in large losses for the insurance industry, phenomena that will result in more prudent risk management and lower revenues. However, insurers should rebuild their capital and continue to expand into the broader financial services field, resulting in some job growth.

Significant growth is expected over the long term, even though increasing health insurance premiums have recently become difficult for some people to afford. As the members of the baby boom generation grow older and a growing share of the Nation's population moves into the older age groups, more people are expected to buy health insurance and long-term-care insurance, as well as annuities and other types of pension products sold by insurance sales agents. If reforms are enacted that makes health insurance affordable to more people, the number of people covered by some form of health insurance will likely be affected.

Population growth also will stimulate demand for auto insurance and homeowners insurance. Also, population growth will create additional demand for businesses to service the needs of more people, and these businesses will need insurance as well. In addition, growing numbers of individuals and businesses are purchasing liability policies to protect against possible large awards from lawsuits brought by people claiming injury or damage from a product.

Many successful insurance companies will recognize the Internet's potential as a powerful marketing tool, increasing employment growth of some occupations while slowing growth of others. Growing use of the Internet might reduce costs for insurance companies, but it also could enable many clients to turn first to the Internet to get information on their policies, obtain price quotes on possible new policies, or submit claims. As insurance companies begin to offer more information and services on the Internet, employment in some occupations, such as insurance sales agents, could be adversely affected.

Productivity gains caused by the greater use of computer software will continue to limit the growth of certain jobs within the insurance industry. For example, upgrades to underwriting software have helped increase underwriter productivity. Automated underwriting quickly rates and analyzes insurance applications, reducing the need for underwriters. In addition, adoption of this technology into other segments of insurance, such as life and health and long-term care, will result in declining employment of underwriters. Workers in claims now may not have to visit the site of customers' damage; they may use satellite imagery to inspect the damage from their computers. In addition, the Internet allows insurance investigators to handle an increasing number of cases by drastically reducing the amount of time it takes them to perform background checks, limiting the additional investigators that must be hired to handle a growing workload. Also, computers have made communications easier among sales agents, adjusters, and insurance carriers—making all much more productive—by linking them directly to the databases of insurance carriers and other organizations. Furthermore, insurance carriers contain costs by increasing using customer service representatives to deal with the day-to-day processing of policies and claims.

Workers in property and casualty insurance, particularly in auto insurance, will be most affected by increasing reliance on the Internet. Auto policies are relatively straightforward and can be issued more easily without the involvement of a live agent. Also, auto premiums tend to cost more per year than do other types of policies, so people are more likely to shop around for the best price -- and the Internet makes it easier to compare rates among companies.

Insurance companies will continue to face increased competition from banks and securities firms entering the insurance markets. As more of these firms begin to sell insurance policies, they will employ increasing numbers of insurance sales agents. In order to stay competitive, more insurance companies are expanding the range of financial products and services they offer, or are establishing partnerships with banks or brokerage firms.

Although employment in the insurance industry is expected to grow slowly, thousands of openings are expected to arise reflecting the need to replace workers who leave the industry, retire, or stop working for other reasons. Despite the fact that the internet allows many people to buy policies online, many sales agents still will be needed to meet face-to-face with clients; some customers prefer to talk directly with an agent, especially regarding complicated policies. Opportunities will be best for sales agents who sell more than one type of insurance or financial service. Opportunities should be good for adjusters because they will still be needed to inspect damage and interview witnesses as the insurance industry, the Nation's population, and the number of claims all grow. Even though the number of available jobs will be small, opportunities should be good for qualified actuaries because many people are discouraged from following this career path due to the stringent requirements of the examination system.

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Note: Some resources in this section are provided by the US Department of Labor, Bureau of Labor Statistics.



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