Insurance agents sell one or more types of insurance, such as life, property, casualty, health, disability, and long-term care (Edwards, 1999, A12). Agents sell insurance policies to individuals and businesses to provide protection against loss or catastrophe. Insurance agents consider the financial status and life situation of their clients, and assist them in selecting their optimal insurance policy. Some policies can be designed to provide retirement income, funds for the education of children, or other benefits (Edwards, 1999, A12).
Insurance agents prepare reports, maintain records, and they help policyholders to settle insurance claims (Abraham & Herman, 1998). Special in-group policies may help employers provide their employees the opportunity to buy insurance through payroll deductions (Abraham & Herman, 1998). Agents may work for one company or independently for several companies (Abraham & Herman, 1998). Brokers do not sell for a particular company, but direct their clients to companies that offer the best rate and coverage (Abraham & Herman, 1998).
Life insurance agents and brokers are sometimes referred to as life underwriters (Abraham & Herman, 1998). Property and casualty insurance agents and brokers sell policies that protect individuals and businesses from financial loss, as a result of automobile accidents, fire or theft, tornadoes and storms, and other events that can damage property (Edwards, 1999, A13). Property and casualty insurance can also sell health insurance policies to businesses that cover the costs of hospital and medical care for their employees (Edwards, 1999, A13).
Increasingly, insurance agents and brokers offer comprehensive financial planning services to their clients, such as retirement planning counseling (Edwards, 1999, A13). Because of this, many insurance agents and brokers are licensed to sell mutual funds and other securities (Edwards, 1999, A13). Education and Training Requirements College training may help agents or brokers grasp the technical aspects of insurance policies and the fundamentals and procedures of selling insurance (Abraham & Herman, 1998).
Many colleges and universities offer courses in insurance, and a few schools offer a bachelor’s degree in insurance (Abraham & Herman, 1998). College courses in finance, mathematics, accounting, economics, business law, government, and business administration enable insurance agents or brokers to understand how social, marketing, and economic conditions relate to the insurance industry (Abraham & Herman, 1998). Changes in tax laws, government benefit programs, and other State and Federal regulations can affect the insurance needs of clients and how agents conduct business (Abraham & Herman, 1998).
Courses in psychology, sociology, and public speaking can prove useful in improving sales techniques (Abraham & Herman, 1998). The use of computers to provide instantaneous information on a wide variety of financial products has greatly improved agents’ and brokers’ efficiency and enabled them to devote more time to clients’ needs (Abraham & Herman, 1998). Insurance agents and brokers must obtain a license in the states where they plan to sell insurance. By law, licenses are issued only to applicants who complete specified courses and then pass written examinations covering insurance fundamentals and insurance laws (Edwards, 1999, A13).
Agents who plan to sell mutual funds and other securities must also obtain a separate securities license (Edwards, 1999, A13). Most states also have mandatory education requirements focusing on insurance laws, consumer protection, and the technical details of various insurance policies (Vault. com, 1999). The Degree requirements include Certification from the National Association of Securities Dealers or the Securities and Exchange Commission (Vault. com, 1999). Entry Level Description An insurance agent’s success is contingent upon his or her ability to seek out and retain clients, and on the agent’s reputation among colleagues.
Difficulty in developing a client base is what drives many insurance agents from the field within the first six months, as well as the low salary (Abraham & Herman, 1998). An insurance agent must be outgoing and organized, and cannot be creative or sensitive (Vault. com, 1999). An entry-level insurance agent will have to endure long hours and may have high level of dissatisfaction and stress. On the other hand, the agent might enjoy the independence that comes with the job and there are strong advancement opportunities.
New agents usually receive training in a classroom setting at pre-licensing schools conducted by State insurance agents’ associations or at the home or branch offices of the insurance company (Abraham & Herman, 1998). Often they attend company-sponsored classes to prepare for examinations (Abraham & Herman, 1998). Others study on their own and accompany experienced agents when they call on prospective clients (Abraham & Herman, 1998). New agents would work for a firm under a higher-ranking agent or be an independent agent. They would call businesses or homeowners to promote their agency.
Since insurance sales agents obtain many new accounts through referrals, it is important that agents maintain regular contact with their clients to ensure their financial needs are being met as personal and business needs change (Abraham & Herman, 1998). Developing a satisfied clientele who will recommend an agent’s services to other potential customers is a key to success in this field (Abraham & Herman, 1998). Some insurance agents and brokers are also using the Internet to advertise and describe the financial products and services that they provide. Future Outlook
The job outlook for insurance agents is expected to improve. Most job openings are expected to occur thanks to high numbers of agents leaving the profession. Opportunities will be most abundant for people who enjoy sales work and who develop expertise in a wide range of insurance and financial services (Vault. com, 1999). An insurance agent who shows sales ability and leadership may become a sales manager in a local office (Vault. com, 1999). A few advance to agency superintendent or executive positions (Vault. com, 1999). Agents with a strong client base usually prefer to remain in sales.
Most insurance agents and brokers work in small offices, contacting clients and providing insurance policy information (Vault. com, 1999). However, most of their time is spent outside their offices, traveling locally to meet with clients and close sales (Vault. com, 1999). They generally arrange their own hours of work, and often schedule evening and weekend appointments for the convenience of clients (Vault. com, 1999). Although the majority of agents and brokers work no more than 40 hours a week, some work as much as 60 hours a week or even longer (Vault. com, 1999).
The median annual earnings of salaried insurance sales workers were $31,500 in 1997 (Abraham & Herman, 1998). The middle 50 percent earned between $21,l00 and $49,000 a year (Abraham & Herman, 1998). The lowest 10 percent earned $15,000 or less, while the top 10 percent earned over $76,900 (Abraham & Herman, 1998). Many independent agents are paid by commission only, whereas sales workers who are employees of an agency may be paid in one of three ways, salary only, salary plus commission, or salary plus bonus Commissions, however, are the most common form of compensation, especially for experienced agents (Abraham & Herman, 1998).
The amount of the commission depends on the type and amount of insurance sold, and whether the transaction is a new policy or a renewal (Abraham & Herman, 1998). Bonuses are usually awarded when agents meet their sales goals or when an agency’s profit goals are met. Some agents involved with financial planning receive an hourly fee for their services rather than a commission (Abraham & Herman, 1998). Rising incomes, as well as a concern for financial security, should stimulate the growth of mutual fund sales (Vault. com, 1999).
Insurance agents do not desire a rise in crime, since fear of crime leads more people to seek insurance coverage for their homes, cars, and valuables (Vault. com, 1999). Sales of commercial insurance should increase as new businesses emerge and existing firms expand their coverage (Vault. com, 1999). Trends toward multiline agents, self-insurance, and group policies will also contribute to increased volume of insurance sales, and open positions (Vault. com, 1999). Since insurance is considered a necessity, agents are unlikely to face unemployment in times of recession (Vault. com, 1999).