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Build a Framework

It is helpful to have a mental framework of what functions financial services firms do when looking at job possibilities in this area. Professors Zvi Bodie and Robert Merton of Harvard Business School argue that financial service institutions, systems and products can be understood by providing the following functions: a payments system for exchange of services; a mechanism for the pooling of funds to undertake large-scale enterprises; a way to transfer resources; a way of managing uncertainty and controlling risk; a body of price information to help coordinate decentralized decision-making; and a way of dealing with agency problems created by asymmetric information.

Huge Part of the Economy

The insurance industry is a powerful part of the U.S. economy. In 1998, policy premiums exceed $700 billion dollars.

Banks Becoming More Important

Life insurance is increasingly sold through banks. Today, 32% of all annuities were sold through banks.

A Big Employer

Over two million people work in the insurance industry. Insurance is one of the biggest employers in the United States.

Hiring is Red Hot

Hiring is hot in 1999. The National Insurance Recruiters Association is seeing "phenomenal activity" in hiring. Last year, the association averaged 25 new job listings per week; this year it is averaging between 35 and 45. Employers are selective, however, and are looking for unusual experience and specialty talents.

Demand for Insurance Products Rising

Most analysts expect the demand for insurance to rise as risks become more complex and abundant in the economy. The growth in the industry, according to the Bureau of Labor Statistics is expected to be within 20 to 40 percent over the next fifteen years. There is also an expanding set of employee benefits including child care, employee savings accounts, payroll deduction property and casualty that will expand opportunities in the insurance industry.

Malpractice Insurance a Growth Area

A huge growth area is physicians malpractice insurance. Companies like MICOA are aggressively hiring and have built a strong niche servicing physicians with malpractice insurance, risk reduction advice and other financial services.

Fewer and Fewer Life Insurance Agents Coming Online

The number of persons becoming life insurance agents is down dramatically. There were 23,000 new agents in 1994 vs. 56,000 in 1975. It's tough to make it as an agent these days with competition from employer-provided insurance, banks and stock brokerages. It's now estimated that four in five persons making less than $50,000 a year will never see an actual life insurance agent in their lifetimes.

Not All Companies Will Survive

It's important to know the stability of the insurance company you go to work for. In the 1980s four large insurance companies failed including Executive Life and Mutual Benefit.

Lloyds a Centerpiece

Lloyds of London is one of the most important financial institutions in the world. Lloyds provides liquidity to the reinsurance market throughout the world by providing a venue for insurance companies to share risks with other large investors.

Securitization a Possibility

There is increasing speculation that many insurance companies will get out of the business of bearing risk altogether and will reinsure all contracts, perhaps through securitization or derivative contracts. Thus far, however, the idea hasn't gone far. The few catastrophe bonds underwritten haven't found investors.

IT Types in High Demand

There are tremendous opportunities in the management of information in insurance with all the different state rules and products. It is increasingly the case that companies are hiring information services professionals because of the high demands for automation caused by insurance paid for by payroll deduction.

Health Insurance Area Hot

The aging of the population has been dramatically increasing the demand for health insurance. Despite recent regulatory reexamination, the health insurance business is likely to see tremendous future growth, even if health care reform takes place.

Banks Playing Important Role

A sector in life insurance which is seeing tremendous growth is insurance sold through banks. People are increasingly relying on their bankers to sell them a variety of financial services. Banks charge much lower commissions and benefit by helping their customers become financially secure in retirement. Think of specialty players in this business like Lifestyle Financial Investments at (800) 843-3818.