The complex business of being covered for a worst-case scenario

There’s more to the insurance industry than making sure you’re covered if your car gets stolen or your widescreen TV decides to blow up. It’s a huge global industry and insurance premiums totalled more than $4.3 trillion in 2010.

In the US (the largest insurance centre, followed by Japan and the UK), the industry provides about 2.3 million jobs. In the UK, this figure is more than 275,000, according to the Association of British Insurers.

The industry has four main areas:

Insurers — Assess risk and develop products for sale to individuals and corporations.

Re-insurers — Insure insurers against risk of significant losses.

Insurance brokers — Intermediaries who sell insurance products – particularly important in the corporate market.

Lloyds market — About 80 corporations, individuals, underwriters and financial backers, or syndicates, who come together to spread risk.

Key players

Roles and career paths

Underwriting — Involves extensive risk analysis, sifting stats on industries, demographics and clients to prepare a quote.

Actuarial — The domain of the maths whizz. Actuaries produce financial models based on the statistical analysis of risk, which are used by underwriters in their analysis.

Broking — The salespeople of insurance, who try to find the right product for a client. Formal graduate training schemes are now increasingly prevalent, as are professional qualifications.

Claims — Where most insurance people work. Graduates are more likely to land in fraud detection or claims investigation.

Pay and bonuses

Actuaries are among the highest paid professionals in the industry. In the US, the median annual wage of qualified actuaries is $88k, but the top 10% earn over $160k, according to the Bureau of Labor Statistics. In the

UK, the starting salary for qualified actuaries is £44k ($72k), increasing to £184k ($300k) for a chief actuary, according to The Actuarial Profession.

More recently, actuaries have been recruited on a contract basis to work on projects related to Solvency II – an EU regulation that requires insurance firms to hold more capital to reduce the risk of insolvency. It’s been known for actuaries to command up to £2,000 ($3,140) a day for these roles. A junior commercial underwriter in the UK starts on £20k-25k ($31k-40k), according to figures from recruiters Morgan McKinley, which rises to £35k-60k ($55k-95k) at the senior end. Specialist Lloyds underwriters should expect a starting salary of £25k-35k ($40k-55k), but it’s possible to earn £70k-150k ($110k-235k) in a senior position.

Skills sought

It takes five to seven years just to qualify as an associate actuary, but training is usually provided by the employer. You will need a maths-based degree to get your foot in the door, but this is the case for most graduate roles in insurance.

“Applicants will have demonstrated analytical and social skills in internships, ideally showing off an aptitude for insurance and financial issues,” says Verena Konig, talent management consultant at Munich Re.

“Personal commitment, good communication skills and openness round off the ideal profile.”

For underwriting roles, a good level of numeracy is required, plus communication skills, as you will have to liaise with other business areas and clients.

Insurance firms are also dealing with a more complex regulatory environment – Solvency II is placing great demands on insurance firms in Europe from an operational and technology standpoint, for example.

Keeping up with developments in this area would be valuable and “helps ensure you can carry out the job function effectively and efficiently”, according to Jonas Ang, vice president and head of human resources at AIA Singapore.