Property and casualty insurance agents and brokers sell policies that help individuals and companies cover expenses and losses from such disasters as fires, burglaries, traffic accidents, and other emergencies. These salespeople also may be known as fire, casualty, and marine insurance agents or brokers. There are approximately 30,000 property and casualty insurance agents and brokers employed in the United States.
The development of the property and casualty insurance industry parallels the history of human economic development. This type of insurance was first established in the maritime field. A single shipwreck could put a ship owner out of business, so it became essential for trade financiers to share this risk. Organized maritime insurance began in the late 17th century at Lloyd’s coffeehouse in London, where descriptions of individual ships, their cargoes, and their destinations were posted. Persons willing to share the possible loss, in return for a fee, signed their names below these descriptions indicating what percentage of the financial responsibility they were willing to assume. Those who signed were known as “underwriters,” a term still used in the insurance business.
As people became more experienced in this procedure, predictions of loss became more accurate and rates were standardized. To provide protection for larger risks, individuals organized companies. The first marine insurance company in the United States—the Insurance Company of North America—was founded in Philadelphia in 1792 and still does business today.
Other types of insurance developed in response to people’s need for protection. Insurance against loss by fire became available after the disastrous lesson of the London Fire of 1666. The first accident insurance policy in the United States was sold in 1863. Burglary insurance—protection against property taken by forced entry—was offered soon thereafter. Theft insurance, which covers any form of stealing, was first written in 1899.
Around the turn of the century, the development of the “horseless carriage” led to the automobile insurance industry. The first automobile policy was sold in 1898. This area of the insurance field grew rapidly. In the mid-1990s premiums written for automobile insurance (including liability and collision and comprehensive policies) totaled more than $102 billion.
Growth of business and industrial organizations required companies to offer protection for employees injured on the job. The first workers’ compensation insurance was sold in 1910.
Insurance companies have always been alert to new marketing possibilities. In the past few decades, increasing emphasis has been placed upon “package” policies offering comprehensive coverage. A typical package policy is the homeowner’s policy, which, in addition to fire protection for the insured’s home and property, also covers losses for liability, medical payments, and additional living expenses. In the mid-1950s, a group of private firms provided the first insurance on the multimillion dollar reactors used in atomic energy plants.
Over the course of the past decade, costs associated with the property and casualty insurance industry (including underwriting losses) have outstripped the annual rate of inflation. This has generally led to an increase in the premium rates charged to customers. The largest increases have occurred in the automobile insurance sector of the industry. The overall trend reflects some basic changes in American society, including a substantial rise in crime and litigation and the development of expensive new medical technologies. The main challenge of the property and casualty insurance industry in the coming years is to stabilize premium rates to remain competitive with alternative forms of risk financing.
The Job of Property and Casualty Insurance Agents and Brokers
Property and casualty insurance salespeople work as either agents or brokers. An agent serves as an authorized representative of an insurance company. A broker, on the other hand, serves as the representative for the client and has no contracts with insurance companies.
Agents can be independent agents, exclusive agents, or direct writers. Independent agents may represent one or more insurance companies, are paid by commission, are responsible for their own expenses, and own the rights to the policies they sell. Exclusive agents represent only one insurance company, are generally paid by commission, are generally responsible for all of their own expenses, and usually own the rights to the policies that they sell. Direct writers represent only one insurance company, are employees of that company (and therefore are often paid a salary and are not responsible for their own expenses), and do not own the rights to the policies that are owned by the company.
Regardless of the system that is used, salespeople operate in a similar fashion. Each one orders or issues policies, collects premiums, renews and changes existing coverage, and assists clients with reports of losses and claims settlement. Backed by the resources of the companies that they represent, individual agents may issue policies insuring against loss or damage for everything from furs and automobiles to ocean liners and factories.
Agents are authorized to issue a “binder” to provide temporary protection for customers between the time the policy application is signed and the policy is issued by the insurance company. Naturally the agent must be selective in the risks accepted under a binder. Sometimes a risk will be refused by a company, which might cause the agent to lose goodwill with the customer. Because brokers do not directly represent or have contracts with insurance companies, they cannot issue binders.
Some agents or brokers specialize in one type of insurance such as automobile insurance. All agents or brokers, however, must be aware of the kind of protection required by their clients and the exact coverage offered by each company that they represent.
One of the most significant aspects of the property and casualty agent’s work is the variety encountered on the job. An agent’s day may begin with an important conference with a group of executives seeking protection for a new industrial plant and its related business activities. Following this meeting, the agent may proceed to the office and spend several hours studying the needs of the customer and drafting an insurance plan. This proposal must be thorough and competitively priced because several other local agents will likely be competing for the account. While working at the office, the agent usually receives several calls and visits from prospective or current clients asking questions about protection, policy conditions, changes, or new developments.
At noon, the agent may attend a meeting of a service club or have lunch with a policyholder. After lunch, the agent may visit a garage with a customer to discuss the car repairs needed as the result of the client’s automobile accident. Back at the office, the agent may talk on the telephone with an adjuster from the insurance company involved.
In the late afternoon, the agent may call on the superintendent of schools to discuss insurance protection for participants and spectators at athletic events and other public meetings. If the school has no protection, the agent may evaluate its insurance needs and draft a proposed policy.
Upon returning to the office, the agent may telephone several customers, dictate responses to the day’s mail, and handle other matters that have developed during the day. In the evening, the agent may call on a family to discuss insurance protection for a new home.
Property and Casualty Insurance Agent and Broker Career Requirements
High School
Insurance companies typically insist that their agents have at least a high school diploma, and most strongly prefer their agents to have a college education. There are a number of classes you can take in high school to prepare yourself both for college and for working in the insurance industry. If your high school offers business, economics, or finance classes, be sure to take advantage of these courses. Mathematics classes will also give you the opportunity to develop your skills working with numbers, which is an important aspect of insurance work. Computer courses will allow you to become familiar with this technology, which you will use throughout your career. In order to develop your communication skills—essential for any salesperson— take English and speech classes. Finally, consider taking classes that will give you insight into people’s actions, which is another important skill for a salesperson. Psychology and sociology classes are courses that may offer this opportunity.
Postsecondary Training
Although college training is not a prerequisite for insurance work, those who have a college degree in economics or business will probably have an advantage starting out in this field. Many colleges and universities offer courses in insurance, and a number of schools offer a bachelor’s degree in insurance. Classes you are likely to take in college include finance, accounting, and economics. Business law and business administration classes will give you an understanding of legal issues and insurance needs. Also, psychology courses may help you to increase your understanding of people. Finally, keep up with your computer work. Courses that teach you to use software, such as spreadsheet programs, will keep your skills up-to-date and make you more marketable. For some specialized areas of property insurance, such as fire protection for commercial establishments, an engineering background may prove helpful.
Certification or Licensing
Those agents who wish to seek the highest professional status may pursue the designation of chartered property casualty underwriter (CPCU). To earn the designation, agents must complete at least three years in the field successfully, demonstrate high ethical practices in all work, and pass a series of examinations offered by the American Institute for Chartered Property and Casualty Underwriters (AICPCU). Agents and brokers may prepare for these examinations through home study or by taking courses offered by colleges, insurance associations, or individual companies. In 2003, AICPCU introduced a new eight-exam CPCU program that allows agents to specialize in either personal or commercial insurance.
All agents and brokers must obtain licenses from the states in which they sell insurance. Most states require that the agent pass a written examination dealing with state insurance laws and the fundamentals of property and casualty insurance. Often, candidates for licenses must show evidence of some formal study in the field of insurance.
Other Requirements
An agent or broker must thoroughly understand insurance fundamentals and recognize the differences between the many options provided by various policies. This knowledge is essential to gain the respect and confidence of clients. To provide greater service to customers and increase sales volume, beginning agents must study many areas of insurance protection. This requires an analytical mind and the capacity for hard work.
Successful agents and brokers are able to interact with strangers easily and talk readily with a wide range of people. For example, an agent or broker may need to talk with teenagers about their first cars, with business executives faced with heavy responsibilities, or with widows confronted for the first time with financial management of a home. Agents and brokers must be resourceful, self-confident, conscientious, and cheerful. As in other types of sales occupations, a strong belief in the service being sold helps agents to be more successful in their presentations.
Because they spend so much of their time with others, agents and brokers must have a genuine liking for people. Equally important is the desire to serve others by providing financial security. To be successful, they must be able to present insurance information in a clear, nontechnical fashion. They must be able to develop a logical sales sequence and presentation style that is comfortable for prospects and clients.
Successful agents and brokers may participate in community and service activities to stay visible within their communities and to maintain or increase their volume of business. Agents and brokers often have an unusual facility for recalling people’s names and past conversations they’ve had with them.
Exploring Property and Casualty Insurance Agent and Broker Career
Because of state licensing requirements, it is difficult for young people to obtain part-time experience in this field. Summer employment of any sort in an insurance office may give you helpful insights into the field. Because many offices are small and must have someone on premises during business hours, you may find summer positions with individual agencies or brokerage firms. Colleges with work-study programs may offer opportunities for practical experience in an insurance agency.
Employers
Approximately 30,000 property and casualty insurance agents and brokers are employed in the United States. Insurance companies are the principal employers; however, some agents and brokers (approximately 25 percent of all insurance salespeople) are self-employed.
Starting Out
College graduates are frequently hired through campus interviews for salaried sales positions with major companies. Other graduates secure positions directly with local agencies or brokerages through placement services, employment offices, or classified advertisements in newspapers. Many high school and college graduates apply directly to insurance companies. Sometimes individuals employed in other fields take evening or home-study courses in insurance to prepare for employment in this field.
Once hired, the new agent or broker uses training materials prepared by the company or by industry trade groups. In smaller agencies, newcomers may be expected to assume most of the responsibility for their own training by using the agency’s written resources and working directly with experienced agents. In larger organizations, initial training may include formal classroom instruction and enrollment in education programs such as those offered by the American Institute for Chartered Property and Casualty Underwriters. Sometimes insurance societies sponsor courses designed to help the beginning agent. Almost all agents receive directed, on-the-job sales supervision.
Advancement
Sales agents may advance in one of several ways. They may decide to establish their own agency or brokerage firm, join or buy out an established agency, or advance into branch or home office management with an insurance company.
Self-employed agents or brokers often remain with the organization that they have developed for the length of their careers. They may grow professionally by expanding the scope of their insurance activities. Many agents expand their responsibilities and their office’s sales volume by hiring additional salespeople. Occasionally an established agent may enter related areas of activity. Many property insurance agents, for example, branch out into real estate sales. Many agents and brokers devote an increasing amount of their time to worthwhile community projects, which helps to build goodwill and probable future clients.
Earnings
Recently hired sales agents are usually paid a moderate salary while learning the business. After becoming established, however, most agents are paid on the basis of a commission on sales. Agents who work directly for an insurance company often receive a base salary in addition to some commission on sales production. Unlike life insurance agents, who receive a high first-year commission, the property and casualty agent usually receives the same percentage each time the premium is paid.
In 2005, all insurance sales agents (including property and casualty) earned a median salary of $42,340 a year, according to the U.S. Department of Labor. The lowest 10 percent earned $23,630, and the highest 10 percent earned $113,290 or more.
Salespeople employed by companies often receive fringe benefits (such as retirement income, sick leave, and paid vacations), whereas self-employed agents or brokers receive no such benefits.
Work Environment
Property and casualty insurance agents must be in constant contact with people—clients, prospective clients, and the workers in the home office of the insurance companies. This can be very time-consuming, and occasionally frustrating, but it is an essential element of the work.
Two of the biggest drawbacks to this type of work are the long hours and the irregular schedule. Agents often are required to work their schedules around their clients’ availability. Especially in their first years in the business, agents may find that they have to work three or four nights a week and one or two days on the weekend. Most agents work 40 hours a week, but some agents, particularly those just beginning in the field and those with a large clientele, may work 60 hours a week or more.
Property and Casualty Insurance Agent and Broker Career Outlook
Employment for all insurance agents and brokers is expected to experience little change or grow more slowly than the average for all occupations through 2014, according to the U.S. Department of Labor. Nevertheless, individuals with determination and the right skills (including fluency in a foreign language, especially Spanish) should have numerous job opportunities for several reasons. The overall demand for insurance should be strong as the general population grows and the amount of personal and corporate possessions increases. Most homeowners and business executives budget insurance as a necessary expense. In addition, laws that require businesses to provide workers’ compensation insurance and car owners to obtain automobile liability protection help to maintain an insurance market.
A number of factors, however, are responsible for restraining job growth of insurance agents and brokers. Computers enable agents to perform routine clerical tasks more efficiently, and more policies are being sold by mail and phone. Also, as insurance becomes more and more crucial to their financial health, many large businesses are hiring their own risk managers, who analyze their insurance needs and select the policies that are best for them.
There is a high turnover in this field. Many beginning agents and brokers find it hard to establish a large, profitable client base, and they eventually move on to other areas in the insurance industry. Most openings will occur as a result of this turnover and as workers retire or leave their positions for other reasons.
For More Information:
- Independent Insurance Agents and Brokers of America
- Association of Professional Insurance Women