Insurance Industry

Goods and services. The insurance industry provides protection against financial losses resulting from a variety of perils. By purchasing insurance policies, individuals and businesses can receive reimbursement for losses due to car accidents, theft of property, and fire and storm damage; medical expenses; and loss of income due to disability or death.

Industry organization. The insurance industry consists mainly of insurance carriers (or insurers) and insurance agencies and brokerages. In general, insurance carriers are large companies that provide insurance and assume the risks covered by the policy. Insurance agencies and brokerages sell insurance policies for the carriers. While some of these establishments are directly affiliated with a particular insurer and sell only that carrier’s policies, many are independent and are thus free to market the policies of a variety of insurance carriers. In addition to supporting these two primary components, the insurance industry includes establishments that provide other insurance-related services, such as claims adjustment or third-party administration of insurance and pension funds.

These other insurance industry establishments also include a number of independent organizations that provide a wide array of insurance-related services to carriers and their clients. One such service is the processing of claims forms for medical practitioners. Other services include loss prevention and risk management. Also, insurance companies sometimes hire independent claims adjusters to investigate accidents and claims for property damage and to assign a dollar estimate to the claim.

Insurance carriers assume the risk associated with annuities and insurance policies and assign premiums to be paid for the policies. In the policy, the carrier states the length and conditions of the agreement, exactly which losses it will provide compensation for, and how much will be awarded. The premium charged for the policy is based primarily on the amount to be awarded in case of loss, as well as the likelihood that the insurance carrier will actually have to pay. In order to be able to compensate policyholders for their losses, insurance companies invest the money they receive in premiums, building up a portfolio of financial assets and income-producing real estate which can then be used to pay off any future claims that may be brought. There are two basic types of insurance carriers: primary and reinsurance. Primary carriers are responsible for the initial underwriting of insurance policies and annuities, while reinsurance carriers assume all or part of the risk associated with the existing insurance policies originally underwritten by other insurance carriers.

Working Conditions

 Many workers in the insurance industry—especially those in administrative support positions—work a 5-day, 40-hour week. Those in executive and managerial occupations often put in more than 40 hours. There are several occupations in the insurance industry where workers may work irregular hours outside of office settings. Those working in sales jobs need to be available for their clients at all times. This accommodation may result in these individuals working 50 to 60 hours per week. Also, call centers operate 24 hours a day, 7 days a week, so some of their employees must work evening and weekend shifts. The irregular business hours in the insurance industry provide some workers with the opportunity for part-time work. Part-time employees make up 8 percent of the workforce.

Work environment. Insurance employees working in sales jobs often visit prospective and existing customers’ homes and places of business to market new products and provide services. Others working in the industry may need to frequently leave the office to inspect damaged property, and at times can be away from home for days, traveling to the scene of a disaster—such as a tornado, flood, or hurricane—to work with affected policyholders and government officials.

A small, but increasing, number of insurance employees spend most of their time on the telephone working in call centers, answering questions and providing information to prospective clients or current policyholders. These jobs may include selling insurance, taking claims information, or answering medical questions.

As would be expected in an industry dominated by office and sales employees, the incidence of occupational injuries and illnesses among insurance workers is low. In 2006, only 1.3 cases per 100 full-time workers were reported among insurance carriers, while just 0.7 cases per 100 full-time workers were reported among agents and brokers. These figures compare with an average of 4.4 for all private industry.

Emplyoment

The insurance industry had about 2.3 million wage and salary jobs in 2006. Insurance carriers accounted for 62 percent of jobs, while insurance agencies, brokerages, and providers of other insurance-related services accounted for 38 percent of jobs.

The majority of establishments in the insurance industry were small; however, a few large establishments accounted for many of the jobs in this industry. Insurance carriers tend to be large establishments, often employing 250 or more workers, whereas agencies and brokerages tend to be much smaller, frequently employing fewer than 20 workers.

 Many insurance carriers’ home and regional offices are situated near large urban centers. Insurance workers who deal directly with the public are located throughout the country. Almost all of those working in sales work out of local company offices or independent agencies. Many others in the industry work for independent firms in small cities and towns throughout the country.