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Insurance Sales Agents - What They Do

How to Advance (Advancement)
A number of organizations offer professional designation programs that certify an agent’s expertise in specialties such as life, health, and property and casualty insurance, as well as financial consulting. For example, The National Alliance for Insurance 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 who complete certification are usually required to fulfill a specified number of hours of continuing education to retain their designation, as determined by the Alliance.

In the area of financial planning, many agents find it worthwhile to demonstrate competency by earning 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 exam tests 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) and the Chartered Life Underwriter (CLU) designations, issued by the American College in Bryn Mawr, Pennsylvania, typically require professional experience and the completion of an eight-course program of study. For those new to the industry, however, the American College offers the Life Underwriter Training Council Fellow (FUTCF), an introductory course that teaches basic insurance concepts. Many property and casualty insurance agents obtain the Chartered Property Casualty Underwriter (CPCU) designation, offered by the American Institute for Chartered Property Casualty Underwriter. The majority of professional designations in insurance have continuing education requirements.

An insurance sales agent who shows ability and leadership may become a sales manager in a local office. A few advance to managerial or executive positions. However, many who have established a client base prefer to remain in sales work. Some—particularly in the property and casualty field—launch their own independent agencies or brokerage firms.

Insurance sales agents held about 434,800 jobs in 2008. About 51 percent of insurance sales agents work for insurance agencies and brokerages. About 21 percent 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 the finance and insurance industries. Approximately 22 percent of insurance sales agents are self employed.

The majority of insurance sales agents are employed in local offices or independent agencies, but some work in the headquarters of insurance companies.

Job Outlook
Employment is expected to grow about as fast as average for all occupations. Opportunities will be best for college graduates who have sales ability, excellent interpersonal skills, and expertise in a wide range of insurance and financial services.

Job Growth
Employment of insurance sales agents is expected to increase by 12 percent over the 2008–18 period, which is about as fast as average for all occupations. Future demand for insurance sales agents depends largely on the variety of financial products and volume of sales. Sales of health insurance, long-term-care insurance, and other comprehensive financial planning services designed specifically for the elderly 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 and are shedding their captive agents—those agents working directly for insurance carriers. Instead carriers are relying more on independent agents or brokers.

It is unlikely that the Internet will threaten the jobs of these agents. The automation of policy and claims processing allows insurance agents to take on more clients. Most clients value their relationship with their agent and prefer personal service, discussing their policies directly with their agents, rather than through a computer. Insurance law 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.

College graduates who have sales ability, excellent interpersonal skills, and expertise in a wide range of insurance and financial services should enjoy the best prospects. Multilingual agents should have an advantage, because they can serve a wider range of customers. Additionally, insurance language tends to be quite technical, so agents who have a firm understanding of relevant technical and legal terms will also be desirable to employers. Many beginning agents fail to earn enough from commissions to meet their income goals and eventually transfer to other careers. Many job openings are likely to result from the need to replace agents who leave the occupation or retire.

Agents may face some competition from traditional securities brokers and bankers, as they also sell insurance policies. Insurance sales agents will need to expand the products and services they offer as consolidation increases among insurance companies, banks, and brokerage firms and as demands increase from clients for more comprehensive financial planning.

Independent 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 business. Agents who offer better customer service also will remain competitive.

The median annual wages of wage and salary insurance sales agents were $45,430 in May 2008. The middle 50 percent earned between $33,070 and $68,730. The lowest 10 percent had earnings of $26,120 or less, while the highest 10 percent earned more than $113,930. Median annual wages in May 2008 in the two industries employing the largest number of insurance sales agents were $48,150 for insurance carriers, and $44,450 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.

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