Insurance Career Field

Insurance Careers Background

Insurance Careers 1The insurance industry provides protection for its customers against financial loss from various hazards. This protection is offered in the form of insurance policies. The industry is a massive, highly complex one that has grown out of an ancient and very simple principle: The more people who share a financial risk, the smaller the risk is for each.

A crude but effective form of insurance based on this principle was applied thousands of years ago in China. Boats often sank in the treacherous Yangtze River, and cargoes were lost, sometimes bringing financial ruin to their owners. Then the shippers developed the idea of sharing the risk by having each person’s goods distributed among many boats. That way, if one boat sank, a number of people lost a small part of their belongings, but no one person suffered a heavy loss.

The early Babylonians had a form of credit insurance. The Code of Hammurabi, a collection of Babylonian laws written around 1800 BC, stipulated that a borrower did not have to repay a loan if personal misfortune made it a hardship to do so. The borrower paid an additional amount for this protection.

Another form of insurance made life a little less hazardous for American settlers in the early frontier days. If a family’s cabin burned, the neighbors would get together and build them a new one, knowing that they would get the same kind of help if the tables were turned. In a way, they too were sharing the risk.

Today, the population is much too large and life is much too complicated for such simple means of sharing the risk to protect people against the many hazards that could cost them their property or their financial security. Instead, people share the risks by purchasing insurance policies. Customers pay a certain amount of money, called a premium, to an insurance company for coverage against possible loss.

When a person buys a fire insurance policy on a home, for example, he or she pays the insurance company only a small fraction of what it would cost to replace the house. If the house burns down, however, the insurance company is able to pay the owner for all or part of the loss by using the money that many other people have paid for their insurance policies. In that way, each person who buys an insurance policy is protected against financial loss by all of the others who have bought policies.

Employment opportunities in the insurance industry can be found anywhere in the country. In small communities, however, employment is usually limited to agents, brokers, and the clerical workers they employ. Other insurance professionals, such as actuaries, underwriters, and insurance attorneys, work mostly in the larger cities, in home offices or regional offices of the insurance companies or industry organizations. These offices are in cities throughout the country, but the greatest number are concentrated in New York, New Jersey, Massachusetts, Connecticut, and Illinois.