In the spirit of Thanksgiving, we compiled this list of 10 reasons to be grateful for your career in insurance. If this is the only industry you’ve worked in, it can be easy to take all the perks for granted and even if you’ve worked here for 30 years it’s always good to remember just how good we have it:10. Great Vacation Time:Before working in insurance, I was getting one to two weeks off per year. Most insurance professionals get 15 to 25 vacation days to enjoy away from the office. This has allowed me to travel to Europe and to my native Costa Rica more often than I used to be able to. I have a co-worker (another CPCU) who has visited Mexico, Bahamas, Italy, Vatican City, Spain, France, Malta, Tunisia, Canada, Turkey, Kenya, Netherlands, England, Belgium, Luxembourg, Switzerland, Austria, Ecuador, Costa Rica, Liechtenstein, Hong Kong, Macau and Germany (and 12 U.S. states) just in the last five years she’s been in the industry.9. Fantastic Benefits:Insurance professionals tend to get great health, life, and dental insurance plans, along with discounts on their home and auto insurance. After all, it’s the business we’re in!8. 401k and pension plans:Most insurance companies offer 401k plans, and many still offer pensions, which have all but disappeared outside of the financial industry. These plans allow us to completely focus on doing a great job today knowing that my financial future is taken care of.7. Large Need for Up-and-Coming, Ambitious Leaders (Like Us!) Because of Aging Workforce:With many insurance professionals preparing for retirement, there is a great need for strong leaders-which, in turn, presents a tremendous opportunity for career advancement. Insurance is the place to be for young go-getters! The best part is that this benefit hasn’t been advertised much, so there’s a lot of space for new talent.6. Recession Proof Industry: People will always need insurance. Even with recent years’ downturn in the economy, the demand for insurance professionals has only grown. As long as risks exist, they will need to be managed by our industry, regardless of what the stock market or real estate markets are doing.5. Not a Flat Industry: There are numerous levels in an insurance company, which means if you work hard, there is ample room for growth and development in your career. For many entry level roles at the big carriers the hierarchy looks like this: You –> Supervisor –> Manager –> Associate Director –> Director –> Assistant Vice President –> Vice President –> Senior Vice President –> COO –> CEO. This means there’s 10 levels to get promoted to!4. The work is challenging and rewarding:With just five years in the industry, I have helped people file their claims, repair their vehicles, get their medical bills taken care of, rebuild their lives after major catastrophes and properly insure their farms. I’ve helped forecasting the company’s future sales and report on our sales for last quarter. For the last year and a half I’ve been a sales manager helping grow our company in the exciting area of Northern California.3. Very Supportive of Continuing Education:Many insurance companies offer tuition-reimbursement programs that can help you further your education. Whether it’s going back to school to finish your Bachelors, finally getting your MBA or getting technical insurance education the industry is very supportive.2. The Alphabet Soup of Designations:There are more than 90 different insurance designations! Most require passing just three or four tests to secure-some are like a master’s degree in insurance (CPCU, CLU). Many insurance companies will support you in your pursuit of further education. Some provide a small bonus for every test you pass or provide you with travel expenses to attend a conferment ceremony when you earn a major designation. You’re probably used to studying already; if you hold on to the habit, it’s pretty easy to get your designations, and they can make a big difference in your career. You can basically make studying a part time job and turn it into promotions and better opportunities.1. Our Job is to Help People Protect Their Way of Life and Get Back on Their Feet:In insurance, you are not just a cog in the corporate machine: you are making a difference in people’s lives-and there are simply no words for how good that feels.These are just 10 reasons to be thankful? Insurance may not be sexy, but as we talk to others outside the industry let’s remember that we have a lot to be grateful for and that it might be a great next step for someone’s career.
What did the recent GAO report on Terrorism insurance say and what does it mean to the insurance industry? This article presents the official conclusions and points out some other interesting facts found in the details of the report. Also, I provide my perspective on the terrorism insurance availability and call on the insurance industry to come to some consensus on the matter.On Monday, September 15, the Government Accountability Office (GAO) released a study called “Terrorism Insurance: Status of Efforts by Policyholders to Obtain Coverage”. (GAO-08-1057) As a member of the American Academy of Actuaries Terrorism Risk Insurance Subcommittee, I was involved in meetings in Washington DC as the GAO was pulling together expert opinions and background on the issues involved.BackgroundThe terrorist attacks of 9/11 are estimated to have caused insured losses of about 32.5 billion (as of 2006). Just after the attacks, the availability of coverage was severely impaired, causing problems in the real estate sector and other negative economic consequences.To help mitigate these consequences, Congress enacted the Terrorism Risk Insurance Act of 2002, more commonly known as TRIA. Under TRIA, insured must offer terrorism insurance to their commercial policyholders on the same terms they offer for other coverages on the policy. In the event of a terrorist attack, the insurance industry is responsible for a deductible of 20% of their direct earned premium and 15% of losses after that. The US government would cover 85% up to a maximum of $100 billion annually. (NOTE: This seems very small compared to the financial services bailout being considered!)The act has been reauthorized in 2005 and 2007, with changing amounts of deductible for the industry and changes in the lines of business covered. The current act doesn’t expire until 2014.The GAO was tasked with the objective to determine if specific markets in the US are having any trouble getting the amounts of coverage they wish to obtain. Specifically:
Availability of terrorism insurance in certain geographical areas
Factors limiting insurers’ willingness to offer coverage
Advantages and disadvantages of some options for changes to TRIA or the funding mechanism.
The GAO study looked at take up rates, data on insurance companies, and interviews with more than 100 experts on various parts of the insurance process.GAO ConclusionsThe official GAO conclusions include:
That some high-value properties in major cities may face initial challenges in obtaining enough coverage, but eventually manage to by using several insurance companies in more complex insurance structures, buying separate terrorism coverage, or self-insuring
The current ‘soft’ market has helped the availability of terrorism insurance overall
Many insurance company CEOs worry about their overall exposure (aggregation limits) in some geographical areas and seek to control their concentration there.
There is a lack of consensus on what future TRIA options would be the most useful for improving the availability of terrorism insurance coverage.
I have garnered some other interesting information from the meat of the report. Other interesting facts from the GAO report:
The ‘take-up rate’, or the percentage of commercial insurance policyholders opting to buy terrorism coverage has been between 60% and 65% since 2004.
The cost has generally amounted to about 4% of annual premium for these customers. Note that coverage is not usually priced on a percentage basis, but as a loss cost that varies by territory. I’m assuming that the 4% refers to high risk areas since those were targeted in the scope of the study.
The policyholders that don’t purchase coverage do so because they don’t feel at risk or their lender doesn’t require it.
Reinsurers and Rating Agencies may influence the purchase of terrorism insurance.
The GAO asked industry personnel about what options should be enacted to aid with the availability problems. They went on to say that no consensus of industry opinion was found. The options for modifying TRIA include:
Lowering TRIA industry deductible following large terrorist attacks
Permitting tax-deductible reserves for terrorism losses
Forming insurance pools for sharing assets and losses
Limiting state regulation and requirements
What does it mean for youAs an actuary, I have several take-aways from this report. In my opinion, the fact that the GAO didn’t find any serious availability issues means that TRIA will remain in place, unchanged for some time to come, unless a big terrorist attack occurs. In that case, availability will ‘harden’ in the short term while losses are assessed.From a risk management and actuarial point of view, controlling concentration (or your aggregation limits) is key to sleeping easy at night, even if it makes potential insurers (or their brokers) work harder to find coverage. That effort makes the system work better because spreading the loss is an important function of insurance.The industry’s lack of consensus when it comes to alternative options really hurts the industry’s credibility and their ability to influence the options eventually selected. I think a industry-wide conference with interested stakeholders in the terrorism insurance arena would be a valuable first step to a more permanent terrorism insurance solution. In my mind, the government HAS to have a stake in the final arrangement, since the government’s actions have a great influence on terrorism activity in the US.You can read the GAO report GAO-08-1057 at gao.gov.