Insurance companies have two principal functions: underwriting and investment.
Underwriting involves the measurement and calculation of risk. The premiums charged by an insurer reflect this risk. They’re appropriate and commensurate with the degree of likelihood that the insurance company will have to pay a claim if it writes a given policy.
The investment function is equally important. A well-run insurance company will have, at least in the long run, a surplus of income from premiums over actual payouts of claims. This surplus must be properly and equitably invested, so insurance companies have substantial staffs dedicated to earning good returns on this money.
The Three Categories of Insurance Companies
Insurance companies fall into three major categories. Life insurers promise payment at the time of the insured person’s death and they can do much more. Property and casualty insurers write policies that protect individuals and businesses against a variety of risks such as auto accidents, fire, storm damage, wind damage, injuries, and theft. Health insurers write policies that cover medical expenses. Some insurance companies engage in multiple types of policies.
Career Paths in Insurance
The insurance industry employs a large number of people over a range of positions. This is hardly an exhaustive list but it includes some of the more significant and better-paying lines of employment in this industry. As in any industry, there’s always an underlying support staff, and job titles and responsibilities can vary somewhat from employer to employer.
- Actuary: An actuary holds an important technical job. She’s trained in statistical analysis and the scientific determination of insurance policy terms and premiums. It’s the actuary’s job to measure and calculate risk factors so that premiums can be charged accordingly.
- Insurance appraiser: This position involves evaluating claims that come into an insurance company from the angle of assessing the value of damaged property. He gauges the likely cost of repairing or replacing the property. This helps to determine whether the insurance company will pay the claim and, if so, how much the company will pay.
- Claims Adjuster: This role is similar to that of an appraiser. Some insurance companies employ both while others might rely on one or the other. An adjuster typically has broader duties, however, including research such as interviewing witnesses and analyzing police reports.
- Claims Examiner: This position also entails much of the same responsibilities and duties as an adjuster or an appraiser. It’s something like an appraiser and an adjuster rolled into one position.
- Insurance investigator: An investigator is charged with preventing and containing incidences of insurance fraud. This position is most commonly available with companies that insure against bodily injury, property damage, and liability.
- Sales Agent: An agent might work for either the insurance company itself or for an independent insurance broker. It’s her job to sell the company’s policies to consumers.
- Underwriter: Underwriters evaluate the risk an insurance company is likely to take on when it issues a policy and recommend appropriate premiums.
Money managers and securities research professionals: These employees oversee the investment side of the business, ensuring that premiums paid to the company are invested and maintained to the company’s best advantage.