Occupation Profile for Insurance Sales Agents
Sell life, property, casualty, health, automotive, or other types of insurance. May refer clients to independent brokers, work as independent broker, or be employed by an insurance company.
Signficant Points
- In addition to offering insurance policies, agents increasingly sell mutual funds, annuities, and securities and offer comprehensive financial planning services, including retirement and estate planning.
- Agents must obtain a license in the States where they sell.
- Job opportunities should be good for college graduates who have sales ability, excellent interpersonal skills, and expertise in a wide range of insurance and financial services.
Earnings
The median annual earnings of wage and salary insurance sales agents were $43,870 in May 2006. The middle 50 percent earned between $31,640 and $69,180. The lowest 10 percent had earnings of $24,600 or less, while the highest 10 percent earned more than $115,090. Median annual earnings in May 2006 in the two industries employing the largest number of insurance sales agents were $46,210 for insurance carriers, and $42,950 for agencies, brokerages, and other insurance related activities.
Many independent agents are paid by commission only, whereas sales workers who are employees of an agency or an insurance carrier may be paid in one of three ways: salary only, salary plus commission, or salary plus bonus. In general, commissions are the most common form of compensation, especially for experienced agents. The amount of the commission depends on the type and amount of insurance sold and on whether the transaction is a new policy or a renewal. Bonuses usually are awarded when agents meet their sales goals or when an agency meets its profit goals. Some agents involved with financial planning receive a fee for their services, rather than a commission.
Company-paid benefits to insurance sales agents usually include continuing education, training to qualify for licensing, group insurance plans, office space, and clerical support services. Some companies also may pay for automobile and transportation expenses, attendance at conventions and meetings, promotion and marketing expenses, and retirement plans. Independent agents working for insurance agencies receive fewer benefits, but their commissions may be higher to help them pay for marketing and other expenses.
Job Outlook
Employment of insurance sales agents is expected to grow about average for all occupations through 2016, and opportunities will be favorable for persons who are college graduates and who have sales ability, excellent interpersonal skills, and expertise in a wide range of insurance and financial services.
Employment change. Employment of insurance sales agents is expected to increase by 13 percent over the 2006-16 period, which is about as fast as average for all occupations. Future demand for insurance sales agents depends largely on the volume of sales of insurance and other financial products. Sales of health insurance and long-term-care insurance are expected to rise sharply as the population ages. In addition, a growing population will increase demand for insurance for automobiles, homes, and high-priced valuables and equipment. As new businesses emerge and existing firms expand their insurance coverage, sales of commercial insurance also should increase, including coverage such as product liability, workers’ compensation, employee benefits, and pollution liability insurance.
Employment of agents will not keep up with the rising level of insurance sales, however. Many insurance carriers are trying to contain costs and are shedding their captive agents—those agents working directly for insurance carriers. Instead carriers are relying more on independent agents or direct marketing through the mail, by phone, or on the Internet.
In many ways, the Internet should not greatly threaten agents’ jobs as was widely thought. The automation of policy and claims processing is allowing insurance agents to take on more clients. Most clients value their relationship with their agent and still prefer discussing their policies directly with their agents, rather than through a computer.
Insurance and investments are becoming more complex, and many people and businesses lack the time and expertise to buy insurance without the advice of an agent.
Job prospects. Multilingual agents should have good job prospects because they can serve a wider range of customers. Additionally, insurance language tends to be quite technical, so agents who have a firm understanding of relevant technical and legal terms will also be desirable to employers. Many beginning agents fail to earn enough from commissions to meet their income goals and eventually transfer to other careers. Many job openings are likely to result from the need to replace agents who leave the occupation or retire, as a large number of agents are expected to retire over the next decade.
Agents may face increased competition from traditional securities brokers and bankers as they begin to sell insurance policies. Insurance sales agents will need to expand the products and services they offer as consolidation increases among insurance companies, banks, and brokerage firms and as demands increase from clients for more comprehensive financial planning.
Independent agents who incorporate new technology into their existing businesses will remain competitive. Agents who use the Internet to market their products will reach a broader client base and expand their business. Agents who offer better customer service also will remain competitive. Carriers and agencies are increasingly using call centers in an effort to offer better service to customers because they provide greater access to clients’ policies and more prompt services.
Most individuals and businesses consider insurance a necessity, regardless of economic conditions, so agents are not likely to face unemployment because of a recession.
Employment
Insurance sales agents held about 436,000 jobs in 2006. Almost 50 percent of insurance sales agents work for insurance agencies and brokerages. About 23 percent work directly for insurance carriers. Although most insurance agents specialize in life and health insurance or property and casualty insurance, a growing number of multiline agents sell all lines of insurance. A small number of agents work for banks and securities brokerages as a result of the increasing integration of the finance and insurance industries. Approximately 26 percent of insurance sales agents are self employed.
Insurance sales agents are employed throughout the country, but most work in or near large urban centers. Some are employed in the headquarters of insurance companies, but the majority work out of local offices or independent agencies.