Financial Careers: Careers in Insurance

Careers in InsuranceCareers in insurance: If you are contemplating a career in finance, why not look at one of its largest sectors, insurance.

In 2015, 2.5 million people worked for almost 6,000 different insurance companies in the United States.1 These companies had combined premiums totaling $1.2 trillion.2 That’s a lot of money to account for and manage.

There are two main types of insurance companies: life/health and property & casualty.

  • Life/health sector is comprised of mostly life insurance (a payout to cover an unexpected passing) and retirement annuities (contracts where the insurance company makes specified payouts to a client after receiving premiums).
  • Property & casualty insurance mainly covers auto, home, and commercial (business).

The largest life/health companies by premiums are MetLife, Prudential and New York Life, while the largest property & casualty insurers are State Farm, Allstate and Warren Buffett’s Berkshire Hathaway.3

A great part of working in careers in insurance is that it’s quite recession-proof. Everyone needs some kind of insurance, whether it’s driving a car, running a business, or buying a house. Health insurance is even mandated under the Affordable Care Act.

Consequently, the unemployment rate for the property and casualty sector is very low, 2.1% reported by the BLS in June 2015, less than half the national average.4

Further, Insurance Journal cites a Jacobsen and Ward survey revealing 65% of property & casualty insurers plan to continue hiring employees, even if expecting a business slowdown.5

Many businesses also have realized that a solid insurance policy can provide peace of mind and let them focus on their core competencies. Business insurance shields entities from property risks such as theft or fire but also from the risks of costly litigation.

Finally, there are major demographic trends in the insurance industry’s favor with an aging Baby Boomer generation in need of a variety of products from insurers including financial products for retirement. There are a wide variety of roles a professional can have with careers in insurance.

Options for Professional Careers in Insurance


A number of financial professionals work in the investment divisions of insurance companies, helping manage the company’s investment portfolios, which can be massive. For example, life insurer MetLife has amassed a war chest of over $466 billion in assets in its portfolio.6 The company uses the returns from investing the premiums to pay out claims.

Needless to say, managing a fund of that size requires a large team of analysts, accountants, traders, portfolio managers, and operations personnel. As major buy-side institutional clients, insurance companies often work with investment banks and capital market groups for access to desirable product offerings, such as equity IPOs and bond offerings.

Many insurers are also large buyers of complex fixed income and structured products.

So professionals must be well-versed in a variety of alternative investments including commercial and residential mortgage-backed securities (RMBS) and asset-backed securities (ABS) comprised of auto loans, credit card receivables, and even structured settlements. As such, many of these finance professionals have or are pursuing, their CFA or MBA.

A look at some job openings on MetLife’s website turned up openings for auditors and audit managers. They list MBA, CPA and ‘knowledge of investment accounting’ as preferred qualifications.7 Financial accounting is covered in Masters level programs such as a Masters in Finance or MBA in Finance as well as an online MAcc or Masters of Accountancy program.

Insurance Agent

An insurance agent is a salesperson who works for and represents an insurance company, offering a variety of their services. By representing only one insurance company, an agent is known as “captive” meaning they can only sell policies from that company.

This accounts for roughly one-quarter of agents.8 Those agents should be extremely knowledgeable about their products and can tailor a suite of offerings for an individual. The bad thing is they can’t shop around other carriers for the best price.

Conversely, an insurance broker works independently and uses his industry contacts at various firms to provide the customer with the best and cheapest policy, regardless of insurer. This is very much a sales and relationship job, especially in the more lucrative commercial segment.

About half of agents work for an independent brokerage and enjoy relatively flexible working conditions.9 This is one reason ‘insurance sales agent’ ranks #3 in U.S. News ‘Best Jobs’ list.10

In addition to the insurance policies are the financial services that can be sold.

Some insurers like Prudential and Met Life have an extensive menu of offerings. One area of particular interest to many agents is annuities. These retirement products can be used to provide a lifelong income stream, an attractive proposition given low-interest rates. These products also tend to have higher fees, sometimes recurring, for agents.

Careers in Insurance: Commercial

With 38 million small businesses in America, there is the opportunity for talented salespeople to provide larger policies for an entire company or organization. One area that is, unfortunately, growing very quickly is cyber insurance.

Given the monetary damage and reputational harm that befell companies like Target and Sony, many businesses believe it’s safer to have some protection in place. It’s increasingly important to the smaller businesses, where one breach could potentially put them out of business.

The average cost of a breach reached an astounding $7 million in 2016.11

Many businesses choose a stand-alone cyber insurance policy that covers a variety of attacks such as business interruption, corruption of data, identity theft, crisis management costs and even cyber extortion.  And the numbers certainly bear that out in 2016 it is estimated over $3.25 billion in gross written premiums were written for cyber insurance policies.12 This popularity has allowed insurers to now adequately price these stand-alone policies.

We would not expect this threat to slow down anytime soon which is good news for insurance agents that sell these policies. The BLS predicts the position to grow 9% per year until 2024.13

Finally, the unemployment rate for insurance agents is a very low, 2.8%.14 But first starting out, there are high turnover rates for those struggling to meet production quotas, similar to financial advisors.

Compensation: The median insurance broker salary is $47,860 according to the BLS.15 Experienced agents in the 75th percentile typically earn $73,650 and the top 10% makes over $100,000.16 A large part of compensation comes from commissions.

Careers in Insurance: Actuaries

If you have an inclination for mathematics and statistics, you might consider becoming an actuary. If you never considered becoming an actuary that’s OK, CNN Money called it, “the best job you never thought of”.17 These professionals use statistical methods to estimate risk for a company.

what is an actuaryActuaries work in a wide range of fields including different careers in insurance, health care, pensions, consulting and government agencies like Social Security.

Actuaries are also called as expert witnesses to testify on topics relating to underfunded pensions or the mismanaged finances of a city.

Since insurance companies business is the management of risk, it’s no surprise that’s where most actuaries work. Through rigorous calculations, actuaries determine what an insurance company should charge a customer for their policy after assessing the risks involved in the coverage.

If an outlier event such as an earthquake were to happen, the insurance company must be sure they have enough money to pay out the resulting customer claims. So, in addition to setting premiums, actuaries advise insurers on how much money to set aside as reserves based on the probability of occurrence.

The compensation for actuaries is excellent, especially if you work in the insurance sector.

Nationwide, the median pay for actuaries was $97,070.18 In the insurance industry, the best paying employer is Towers Watson, according to Payscale surveys, with a median salary of $164,000.19

The downside to becoming an actuary is all the exams you must take. Combined, it can take candidates six to eight years to complete the program and render an ‘actuarial opinion’ (and you thought the CFA exams were tough).

Careers in Insurance: Investigator

Investigators work for insurance companies to determine if customer claims are valid or fraudulent. This is a vastly important position considering between 5 and 10% of all claims are fraudulent, according to the Coalition Against Insurance Fraud.20

They estimate fraud results in $80 billion annually across all insurance lines.21 That number would presumably be much worse without fraud investigators who work alongside claims adjusters, appraisers, and examiners as a line of defense against insurance fraud.

The investigator is a specialized position with a specific skill set including the ability to conduct interviews and skillfully (and ethically) detect and acquire evidence.

Besides obvious experience in insurance casualty claims or criminal investigations, a great way to prepare for a career as an investigator is by obtaining an online MBA in Fraud Management. This could put the candidate in a better position to land a managerial position.

There is also an online Financial Crimes certificate that is becoming increasingly popular for those looking to get into the sector or to get credentialed. The nationwide average pay for investigators is $66,670 and investigators in the insurance industry specifically is $63,060, according to the BLS.22