February is known as Black History Month, American Heart Month, Oral Hygiene Awareness Month, and many others. For those of us in the insurance industry, we know it as Insurance Careers Month. We have been hearing for a while about how the industry is aging and more and more insurance professionals are or will be retiring, which means that the industry needs to attract people to it. Unfortunately, insurance is widely considered boring, and if you mention it at a party unless someone has an open claim, people tend to glaze over. Many, however, are not aware of the variety of jobs within the insurance industry and their duties. We're here to remedy that.
Sales Representatives
Let's start at the beginning; insurance is a product that must be marketed and purchased. Therefore, there must be people to market and sell it. The insurance company typically markets its products through employed sales representatives, but these sales representatives do not sell the product directly to the insured. Rather, they solicit the product to people known as agents or producers. These agents or producers may be direct employees of the insurance company, but more often, they are independent operators that represent more than one insurance company.
Agents
Agents actually sell the insurance coverage to consumers. Insurance is a complicated business; it is not like many jobs where you are hired, receive a few weeks of on-the-job training and you are good to go. Agents must be licensed, and in order to be licensed must take a required number of hours of classes and pass a licensing exam. There are multiple lines of business that an agent needs a license for; one license does not cover all aspects of the industry. A property and casualty license will allow an agent to sell personal or commercial property and liability coverages. These coverages include but are not limited to, homeowners, personal auto, personal umbrella, commercial general liability, commercial property, commercial auto, truckers, garage, and many others. Life and health insurance require a separate license, and annuities and financial planning require yet another license. Once someone has a license they are allowed to write policies in the state in which they got the license; in order to write coverage in a different state, they must pass that state's required exams.
Once a license to write insurance is obtained however, that is not the end of it. Licenses must be renewed on an annual or semi-annual basis, depending on the state requirements. Each state has different licensing and renewal requirements. Likewise, a certain amount of continuing education credits must be accumulated before a license can be renewed. Agents tend to be outgoing, extroverted types who find it easy to talk to people and like to help them out.
An agent will work with a person or business and when that person or business decides to buy coverage, an application is filled out. Agents writing personal lines generally use quoting systems that provide the rates for multiple companies at one time. Agents writing commercial coverage will have an application completed and will send it to one or more insurance companies for underwriting and obtaining a quoted premium.
Brokers
While an agent represents the company, a broker represents the insured. A broker operates similarly to an independent agent in that they can sell insurance from multiple carriers. However, unlike insurance agents, brokers are not hired representatives of an insurance company. A broker works on behalf of the individual consumer. The consumer hires the broker and the broker searches through the many available insurance options to provide the consumer with the best available option to fit the consumer's insurance needs.
Underwriters
Insurance company underwriters review the applications and determine if the risk presented fits the company's pre-established eligibility guidelines. The underwriter will also review reports submitted with the application such as driving records, and will pull Comprehensive Loss Underwriting Experience reports (CLUE) that show the applicant's past accident history. Not everyone is totally honest on an application, and intentional misrepresentations are considered fraud. If the underwriter discovers losses or other characteristics of the risk that make the applicant ineligible for coverage, the underwriter will advise the agent. Underwriters do have the power to make exceptions based on the quality of the agent's book of business and the risk in general. An underwriter may allow a marginal risk for an agent with an overall profitable book of business, but there are some risks that will never be eligible.
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Christine G. Barlow, CPCU
Christine G. Barlow, CPCU, is Executive Editor of FC&S Expert Coverage Interpretation, a division of National Underwriter Company and ALM. Christine has over thirty years’ experience in the insurance industry, beginning as a claims adjuster then working as an underwriter and underwriting supervisor handling personal lines. Christine regularly presents and moderates webinars on a variety of topics and is an experienced presenter.