Milkround Advice, 11 December 2007

Overview

Insurance according to Wikipedia is “a form of risk management primarily to hedge against the risk of a contingent loss”. The insurance industry helps businesses to protect themselves from risk, and provides a wide range of services to consumers, including car and house insurance, pensions, life cover and savings.

Modern insurance began when clients at Lloyd’s café in London (est. 1688) would make bets on the chances of ships returning safely from voyages, and the owners of ships started to make bets against their safe return in order to hedge their risk. Lloyd’s is still a leading insurance market in London.

The insurance industry is huge in the UK, and as such it offers a large number of graduate opportunities each year, mainly through the larger household name insurance firms, but also through smaller brokers.

Facts about the UK insurance industry:

• It’s the largest in Europe


• It’s the third largest in the world


• It employs 339,000 people, almost a third of all financial services jobs


• It controls 17% of investment in the London stock market


• It pays out almost £156 million per day in pension and life insurance benefits and £54 million per day in general insurance claims. (Association of British Insurers – 2005 UK Insurance Key Facts)

Careers in insurance could see you become a broker, an actuary, an underwriter, risk analyst or claims clerk, as well as a range of the other functions to be found in any business enterprise, such as management, marketing, business development, customer operations, HR and IT.

Insurance careers offer some fantastic rewards – good financial rewards, if not always initially, then after qualification and gaining a few years’ experience; dealing with interesting challenges and clients; and in the City especially a good social life.

As Tim Ablett, general insurance consultant at Project Consulting Partners, in a recent feature in Insurance Times magazine said:

“Without the expertise and skills of the insurers, brokers and all the other associated businesses delivering a range of associated services, the country would literally grind to a halt.

The influence we bring to bear also goes unnoticed – for example, getting the government to provide adequate funding for flood defences, health and safety, as well as the augmentation of the health service provided by the NHS through private health cover and dental cover.”

Over the course of this guide we will look at the career opportunities and working conditions available to graduates in more depth. So read on!

Job Role

Insurance offers a great range of job roles, which could see you dealing with, pitching to and taking care of clients, calculating complex risk premia for policies, or processing claims among many other functions. As well as the below there are a number of other niche roles you might be able to go into, such as loss adjusting, reinsurance, and more.

Actuarial

Actuaries are highly qualified (and respected) finance professionals, who apply mathematical and statistical methods and probability theory to assess risk and support decision making in insurance and finance.

Activities of actuaries including both calculating premiums, and advising on whether a company has sufficient assets to meet its potential and actual liabilities for insurance claims.

Actuaries’ work has an impact on every aspect of an insurance firm’s business. They liaise closely with business managers on commercial matters, so must be able to communicate well with non-specialists and to understand how their function fits into the big picture of business strategy.

Broking

An insurance broker sources, or brokes, contracts of insurance on behalf of their customers. As such they will give advice on the best policies to go for. They must get to know clients’ needs well in order to be able to give good advice, and gain the trust of the client. Insurance brokerage is largely associated with general insurance (car, house etc.) rather than life insurance.

Underwriting

Underwriters assess the eligibility of customers to receive insurance, credit or equity capital, as well as determining the level of premium to charge.

Underwriters do this by evaluating the risk and exposures of the prospective clients. They decide how much coverage the client should receive, how much they should pay for it, or whether to accept the risk at all, and insure them.

The underwriter is charged with acquiring, or “writing” business that will make the insurance company money, and look to protect the company's book of business from risks that might make a loss.

Risk

Risk management involves assessing risk, and developing strategies to manage it, mitigating risk using managerial resources.

Risk management will involve transferring the risk to another party, avoiding risk, reducing the negative impacts of a risk, or accepting some or all of the consequences of a risk.

Roles involved include risk surveyors, risk analysts and risk advisers. In insurance, these professionals are employed by insurance companies and brokers to help them assess the potential financial risks posed by offering insurance cover for particular items or properties.

Risk surveyors provide the underwriters (see above) with information on the levels of risk associated with each client, and ways in which risks could be minimised.

Claims officers

Insurance claims officers decide whether an insurance company will settle a claim and manage the claim through to payment.

Insurance claims handlers are responsible for investigating incidents and paying claims. They decide the extent and validity of the claim, and try to minimise the impact of the loss in financial terms. They assess a claim's authenticity, and attempt to ascertain whether fraud has been committed.

Attributes

Insurance is a diverse career area and the attributes you’ll need to succeed in it vary according to the role you’re aiming to go into.

As a broker, you’ll be dealing with clients on the phone and face-to-face, often spending a considerable amount of time in client meetings and at events, so you will need to be a great communicator and have a gregarious personality. As well as this, you will almost certainly take a professional insurance qualification, and will therefore need to have the study skills and discipline to assimilate large amounts of information! Basic numeracy is also a must, as it is for any insurance pathway.

As an actuary on the other hand you will be involved in some of the most complicated calculations and projections in any field, so will need to be highly numerate and analytical. You will also undertake lengthy and rigorous qualifications so will need to be sufficiently committed and enthusiastic to stay the course.

As an underwriters, claims officer or risk management professional, you will need to be numerate and highly analytical; and have the relevant skills and commitment to study for an insurance professional qualification. And you will additionally need to be able to exercise good judgment, manage your workload and be capable of delivering great service.

Training

Although you will receive significant training on the job, a major component of training in insurance is the passing of a professional qualification. In the UK the main professional body awarding qualifications is the Chartered Insurance Institute. In order to obtain fellowship with the Institute, you need to provide evidence of continuing professional development, over a minimum of 3 years, as well as submitting a 3,500 word dissertation or project report.

There is also a range of more basic courses leading up to eventually taking Fellowship.

Prospects

While insurance is known as an industry that takes school-leavers and trains them from scratch, there are also significant opportunities for graduates, particularly with the larger international firms based in London.

These firms operate graduate training schemes, which will train you in a variety of areas, and progress you to early management status in many cases. Smaller firms tend not to provide graduate training schemes, but will take you on in a junior role and train you and support (and usually fund) you through your insurance qualifications.

In terms of progression within the career area, this varies significantly between roles. One thing in common though is that qualification in the professional exams leads to significant increase in status, responsibility and of course salary too. As an actuary, the long qualification route pays off with very high salaries, especially if you take advantage of the opportunity the career area affords to reach senior strategic management levels within a firm.

As a broker, underwriter, claims officer or risk manager, there are again good opportunities for progression through the management strata of organisations. A small minority of people set up their own brokerages later in their career.

More

Here are some useful links in Insurance, to aid further research, keep abreast of the latest news stories, and last but not least track down some great graduate insurance jobs on Milkround.com!

Chartered Insurance Institute

Courses and Careers – career information on insurance

Insurance Times magazine – news and features about insurance

Lloyd’s of London: Insurance news centre

Insurance graduate jobs and internships on Milkround.com