Agents increasingly offer comprehensive financial planning
services, including retirement and estate planning; as a result,
in addition to offering insurance policies, agents sell mutual
funds, annuities, and securities.
Agents must obtain a license in the States where they plan
to do their selling.
Despite slower than average growth, job opportunities should
be good for college graduates who have sales ability, excellent
interpersonal skills, and expertise in a wide range of insurance
and financial services.
Successful agents often have high earnings, but many beginning
agents fail to earn enough from commissions to meet their income
goals and eventually transfer to other careers.
Nature of the Work
Most people have their first contact with an insurance company
through an insurance sales agent. These workers help individuals,
families, and businesses select insurance policies that provide
the best protection for their lives, health, and property.
Insurance sales agents who work exclusively for one insurance
company are referred to as captive agents. Independent insurance
agents, or brokers, represent several companies and place
insurance policies for their clients with the company that
offers the best rate and coverage. In either case, agents
prepare reports, maintain records, seek out new clients, and,
in the event of a loss, help policyholders settle their insurance
claims. Increasingly, some are also offering their clients
financial analysis or advice on ways the clients can minimize
risk.
Insurance sales agents, commonly referred to as “producers”
in the insurance industry, sell one or more types of insurance,
such as property and casualty, life, health, disability, and
long-term care. Property and casualty insurance agents sell
policies that protect individuals and businesses from financial
loss resulting from automobile accidents, fire, theft, storms,
and other events that can damage property. For businesses,
property and casualty insurance can also cover injured workers’
compensation, product liability claims, or medical malpractice
claims.
Life insurance agents specialize in selling policies that
pay beneficiaries when a policyholder dies. Depending on the
policyholder’s circumstances, a cash-value policy can be designed
to provide retirement income, funds for the education of children,
or other benefits. Life insurance agents also sell annuities
that promise a retirement income. Health insurance agents
sell health insurance policies that cover the costs of medical
care and loss of income due to illness or injury. They also
may sell dental insurance and short-term and long-term-disability
insurance policies.
An increasing number of insurance sales agents are offering
comprehensive financial planning services to their clients,
such as retirement planning, estate planning, or assistance
in setting up pension plans for businesses. As a result, many
insurance agents are involved in “cross-selling” or “total
account development.” Besides offering insurance, these agents
may become licensed to sell mutual funds, variable annuities,
and other securities. This practice is most common with life
insurance agents who already sell annuities; however, property
and casualty agents also sell financial products. (See the
statement on securities, commodities, and financial services
sales agents elsewhere in the Handbook.)
Technology has greatly affected the insurance agency, making
it much more efficient and giving the agent the ability to
take on more clients. Agents’ computers are now linked directly
to the insurance carriers via the Internet, making the tasks
of obtaining price quotes and processing applications and
service requests faster and easier. Computers also allow agents
to be better informed about new products that the insurance
carriers may be offering.
The growth of the Internet in the insurance industry is gradually
altering the relationship between agent and client. In the
past, agents devoted much of their time to marketing and selling
products to new clients, a practice that is now changing.
Increasingly, clients are obtaining insurance quotes from
a company’s Web site and then contacting the company directly
to purchase policies. This interaction gives the client a
more active role in selecting a policy at the best price,
while reducing the amount of time agents spend actively seeking
new clients. Because insurance sales agents also obtain many
new accounts through referrals, it is important that they
maintain regular contact with their clients to ensure that
the clients’ financial needs are being met. Developing a satisfied
clientele that will recommend an agent’s services to other
potential customers is a key to success in this field.
Increasing competition in the insurance industry has spurred
carriers and agents to find new ways to keep their clients
satisfied. One solution is to increase the use of call centers,
which usually are accessible to clients 24 hours a day, 7
days a week. Insurance carriers and sales agents also are
hiring customer service representatives to handle routine
tasks such as answering questions, making changes in policies,
processing claims, and selling more products to clients. The
opportunity to cross-sell new products to clients will help
agents’ businesses grow. The use of call centers also allows
agents to concentrate their efforts on seeking out new clients
and maintaining relationships with old ones. (See separate
Handbook statements on customer service representatives
and on claims adjusters, appraisers, examiners, and investigators.)
Working Conditions
Most insurance sales agents are based in small offices, from
which they contact clients and provide information on the
policies they sell. However, much of their time may be spent
outside their offices, traveling locally to meet with clients,
close sales, or investigate claims. Agents usually determine
their own hours of work and often schedule evening and weekend
appointments for the convenience of clients. Although most
agents work a 40-hour week, some work 60 hours a week or longer.
Commercial sales agents, in particular, may meet with clients
during business hours and then spend evenings doing paperwork
and preparing presentations to prospective clients.
Training, Other Qualifications, and Advancement
For insurance sales agent jobs, most companies and independent
agencies prefer to hire college graduates—especially those
who have majored in business or economics. High school graduates
are occasionally hired if they have proven sales ability or
have been successful in other types of work. In fact, many
entrants to insurance sales agent jobs transfer from other
occupations. In selling commercial insurance, technical experience
in a particular field can help sell policies to those in the
same profession. As a result, new agents tend to be older
than entrants in many other occupations.
College training may help agents grasp the technical aspects
of insurance policies and the fundamentals and procedures
of selling insurance. Many colleges and universities offer
courses in insurance, and a few schools offer a bachelor’s
degree in the field. College courses in finance, mathematics,
accounting, economics, business law, marketing, and business
administration enable insurance sales agents to understand
how social and economic conditions relate to the insurance
industry. Courses in psychology, sociology, and public speaking
can prove useful in improving sales techniques. In addition,
because computers provide instantaneous information on a wide
variety of financial products and greatly improve agents’
efficiency, familiarity with computers and popular software
packages has become very important.
Insurance sales agents must obtain a license in the States
where they plan to do their selling. Separate licenses are
required for agents to sell life and health insurance and
property and casualty insurance. In most States, licenses
are issued only to applicants who complete specified prelicensing
courses and who pass State examinations covering insurance
fundamentals and State insurance laws. The insurance industry
is increasingly moving toward uniform State licensing standards
and reciprocal licensing, allowing agents who earn a license
in one State to become licensed in other States upon passing
the appropriate courses and examination.
A number of organizations offer professional designation
programs that certify one’s expertise in specialties such
as life, health, and property and casualty insurance, as well
as financial consulting. For example, The National Alliance
for Education and Research offers a wide variety of courses
in health, life and property, and casualty insurance for independent
insurance agents. Although voluntary, such programs assure
clients and employers that an agent has a thorough understanding
of the relevant specialty. Agents are usually required to
complete a specified number of hours of continuing education
to retain their designation.
Employers also are placing greater emphasis on continuing
professional education as the diversity of financial products
sold by insurance agents increases. It is important for insurance
agents to keep up to date on issues concerning clients. Changes
in tax laws, government benefits programs, and other State
and Federal regulations can affect the insurance needs of
clients and the way in which agents conduct business. Agents
can enhance their selling skills and broaden their knowledge
of insurance and other financial services by taking courses
at colleges and universities and by attending institutes,
conferences, and seminars sponsored by insurance organizations.
Most State licensing authorities also have mandatory continuing
education requirements focusing on insurance laws, consumer
protection, and the technical details of various insurance
policies.
As the demand for financial products and financial planning
increases, many insurance agents are choosing to gain the
proper licensing and certification to sell securities and
other financial products. Doing so, however, requires substantial
study and passing an additional examination—either the Series
6 or Series 7 licensing exam, both of which are administered
by the National Association of Securities Dealers (NASD).
The Series 6 exam is for individuals who wish to sell only
mutual funds and variable annuities, whereas the Series 7
exam is the main NASD series license that qualifies agents
as general securities sales representatives. In addition,
to further demonstrate competency in the area of financial
planning, many agents find it worthwhile to earn the certified
financial planner or chartered financial consultant designation.
The Certified Financial Planner credential issued by the Certified
Financial Planner Board of Standards, requires relevant experience,
completion of education requirements, passing a comprehensive
examination, and adherence to an enforceable code of ethics.
The CFP exams test the candidate’s knowledge of the financial
planning process, insurance and risk management, employee
benefits planning, taxes and retirement planning, and investment
and estate planning. The Chartered Financial Consultant (ChFC)
designation,issued by theAmerican College
in Bryn Mawr, Pennsylvania, which requires experience and
the completion of an eight-course program of study. The CFP
and ChFC designation and other professional designations have
continuing education requirements.
Insurance sales agents should be flexible, enthusiastic,
confident, disciplined, hard working, and willing to solve
problems. They should communicate effectively and inspire
customer confidence. Because they usually work without supervision,
sales agents must be able to plan their time well and have
the initiative to locate new clients.
An insurance sales agent who shows ability and leadership
may become a sales manager in a local office. A few advance
to agency superintendent or executive positions. However,
many who have built up a good clientele prefer to remain in
sales work. Some—particularly in the property and casualty
field—establish their own independent agencies or brokerage
firms.
Employment
Insurance sales agents held about 400,000 jobs in 2004. Most
insurance sales agents employed in wage and salary positions
work for insurance agencies and brokerages. A decreasing number
work directly for insurance carriers. Although most insurance
agents specialize in life and health insurance or property
and casualty insurance, a growing number of “multiline” agents
sell all lines of insurance. A small number of agents work
for banks and securities brokerages as a result of the increasing
integration of finance and insurance industries. Approximately
1 out of 4 insurance sales agents is self-employed.
Insurance sales agents are employed throughout the country,
but most work in or near large urban centers. Some are employed
in the headquarters of insurance companies, but the majority
work out of local offices or independent agencies.
Job Outlook
Although employment of insurance sales agents is expected
to grow more slowly than average for all occupations through
2014, opportunities will be favorable for college graduates
who have sales ability, excellent interpersonal skills, and
expertise in a wide range of insurance and financial services.
Multilingual agents also should be in high demand because
they can serve a wider range of customers. Insurance language
tends to be quite technical, so it is important for insurance
sales agents to have a firm understanding of relevant technical
and legal terms. Many beginning agents fail to earn enough
from commissions to meet their income goals and eventually
transfer to other careers. Most job openings are likely to
result from the need to replace agents who leave the occupation
or retire. A large number of agents are expected to retire
over the next decade.
Future demand for insurance sales agents depends largely
on the volume of sales of insurance and other financial products.
Sales of health insurance and long-term-care insurance are
expected to rise sharply as the population ages. In addition,
a growing population will increase demand for insurance for
automobiles, homes, and high-priced valuables and equipment.
As new businesses emerge and existing firms expand their insurance
coverage, sales of commercial insurance also should increase,
including coverage such as product liability, workers’ compensation,
employee benefits, and pollution liability insurance.
Employment of agents will not keep up with the rising level
of insurance sales, however. Many insurance carriers are trying
to contain costs. As a result, many are shedding their captive
agents—those agents working directly for insurance carriers—and
are relying more on independent agents or direct marketing
through the mail, by phone, or on the Internet.
Agents who incorporate new technology into their existing
businesses will remain competitive. Agents who use the Internet
to market their products will reach a broader client base
and expand their businesses, but because most clients value
their relationship with their agent, the Internet should not
threaten jobs, given that many individuals still prefer discussing
their policies directly with their agents, rather than through
a computer. Also, the automation of policy and claims processing
is allowing insurance agents to take on more clients.
Agents may face increased competition from traditional securities
brokers and bankers as they begin to sell insurance policies.
Because of increasing consolidation among insurance companies,
banks, and brokerage firms, and due to increasing demands
from clients for more comprehensive financial planning, insurance
sales agents will need to expand the products and services
they offer.
Agents who offer better customer service also will remain
competitive. Call centers are another important way carriers
and agents are offering better service to customers, because
such centers provide greater access to their policies and
more prompt services.
Insurance and investments are becoming more complex, and
many people and businesses lack the time and expertise to
buy insurance without the advice of an agent. Moreover, most
individuals and businesses consider insurance a necessity,
regardless of economic conditions. Therefore, agents are not
likely to face unemployment because of a recession.
Earnings
The median annual earnings of wage and salary insurance sales
agents were $41,720 in May 2004. The middle 50 percent earned
between $29,980 and $66,160. The lowest 10 percent had earnings
of $23,170 or less, while the highest 10 percent earned more
than $108,800. Median annual earnings in May 2004 in the two
industries employing the largest number of insurance sales
agents were $42,010 for insurance carriers, and $41,840 for
agencies, brokerages, and other insurance related activities.
Many independent agents are paid by commission only, whereas
sales workers who are employees of an agency or an insurance
carrier may be paid in one of three ways—salary only, salary
plus commission, or salary plus bonus. In general, commissions
are the most common form of compensation, especially for experienced
agents. The amount of the commission depends on the type and
amount of insurance sold and on whether the transaction is
a new policy or a renewal. Bonuses usually are awarded when
agents meet their sales goals or when an agency meets its
profit goals. Some agents involved with financial planning
receive a fee for their services, rather than a commission.
Company-paid benefits to insurance sales agents usually include
continuing education, training to qualify for licensing, group
insurance plans, office space, and clerical support services.
Some companies also may pay for automobile and transportation
expenses, attendance at conventions and meetings, promotion
and marketing expenses, and retirement plans. Independent
agents working for insurance agencies receive fewer benefits,
but their commissions may be higher to help them pay for marketing
and other expenses.
Related Occupations
Other workers who provide or sell financial products or services
include real estate sales agents and brokers; securities,
commodities, and financial services sales agents; financial
analysts and personal financial advisors; and financial managers.
Other occupations in the insurance industry include insurance
underwriters; claims adjusters, examiners, and investigators.
Sources of Additional Information
Occupational information about insurance sales agents is
available from the home office of many insurance companies.
Information on State licensing requirements may be obtained
from the department of insurance at any State capital.
For information about insurance sales careers and training,
contact:
Independent Insurance Agents of America, 127 S. Peyton
St., Alexandria, VA 22314. Internet: http://www.iiaa.org/
Insurance Vocational Education Student Training (InVEST),
127 S. Peyton St., Alexandria, VA 22314. Internet: http://www.investprogram.org/
For information about health insurance sales careers, contact:
National Association of Health Underwriters, 2000 N. 14th
St., Suite 450, Arlington, VA 22201. Internet: http://www.nahu.org/
For general information on the property and casualty field,
contact:
Insurance Information Institute, 110 William St., New
York, NY 10038. Internet: http://www.iii.org/
For information about professional designation programs,
contact:
The American Institute for Chartered Property and Casualty
Underwriters/Insurance Institute of America, 720 Providence
Rd., P.O. Box 3016, Malvern, PA 19355-0716. Internet: http://www.aicpcu.org/
