There are two primary functions of an insurance company around which all of the insurance-related occupations depend. The first is the underwriting function and the second is as an institutional investor.
Underwriting involves the measurement and calculation of the risks involved in writing an insurance policy for a person, property, or event. The premiums—scheduled payments—charged by an insurer reflect this risk assessed by the underwriter. The premiums are 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 of life insurance, property and casualty, and health insurance. Companies can focus on one sphere or a combination of policy types.
Life insurers promise payment against the event of a person's death and can sell many different types of life insurance products. 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. These policies can be targeted to individuals or businesses. Finally, health insurers write policies that cover medical expenses.
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.
An actuary holds an important technical job. They are 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.
This position involves evaluating claims that come into an insurance company from the angle of assessing the value of the damaged property. They gauge 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.
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.
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.
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.
A Sales Agent might work for either the insurance company itself or for an independent insurance broker. It is their job to sell the company's policies to consumers.
Underwriters evaluate the risk an insurance company is likely to take on when it issues or underwrites policies. Their duties include recommending 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.