Monday, March 3, 2008

Financial Activities on Securities, Commodities, and Other Investments

Securities, Commodities, and Other Investments

Significant Points
  • Most workers in this industry hold associate or bachelor’s degrees.
  • Employment is expected to grow as a result of increasing investment in securities and commodities, along with a growing need for investment advice.
  • The high earnings of successful securities sales agents and investment bankers will result in keen competition for these positions.
Nature of the Industry

The securities, commodities, and other investments industry comprises a diverse group of companies and organizations that manage the issuance, purchase, and sale of financial instruments. These instruments—often called securities—are contracts which give their owner the right to an asset or the right to purchase an asset in the future. Companies sell these financial instruments to raise money from investors to finance new business operations or to improve or expand existing ones. Investors purchase these instruments with the goal of earning money by earning dividends, interest, executing the agreement, or selling the security at a higher price.

Goods and services. The securities industry is made up of a variety of firms and organizations that structure investments, bring together buyers and sellers of securities and commodities, manage investments, and offer financial advice. The products provided by the industry are called securities. The most basic types of security are stocks and bonds, which provide capital to finance corporations. Stocks entitle their holders to partial ownership of a company, whereas bonds are a form of debt that a company pays back with interest. Investors purchase stocks and bonds in order to earn money in the form of dividends or interest, or to sell the issues to other investors at a higher price.

Another type of security is called a derivative, which is a contract to purchase an asset at a specified future date. There are two basic types of derivatives: options and futures. An investor who holds an option has a contractual right to purchase an asset at a set price on a specified date, but is not required to do so. A futures contract is an agreement to purchase an asset at a set price and date with no option to decline. Commodities, for example, corn, wheat, and pork bellies, are often bought and sold in this way, and are among the best-known derivatives. Other goods sold on the derivatives market include foreign currencies, precious metals, oil and natural gas, and electricity. Buyers purchase derivatives with the hope that the price of the asset involved will be higher than the agreed price when the contract matures.

Mutual funds and exchange traded funds (ETFs) are also common investments. In both cases, the issuing firm owns a large portfolio of other securities which, on average, are expected to increase in value. In the case of mutual funds, this portfolio is typically managed by a team of financial analysts who determine which stocks to buy and sell; however, some mutual funds are not actively managed and are instead designed to track a benchmark index, such as the Standard and Poor’s 500 or Dow Jones Industrial Average. Exchange traded funds are almost always designed to replicate a stock index. ETFs can be traded like stocks, unlike mutual funds. Because both of these types of securities require management, the companies who issue them charge a fee. Investors are willing to pay this fee because mutual funds and ETFs have a lower level of risk than other securities.

Besides selling securities, segments of the securities industry also sell advisory services. Investment banks, for example, help companies to plan stock or bond issues and sell them to investors. Securities and commodities exchanges, on the other hand, provide forums for buyers and sellers to trade securities. Private banks and investment advisories help individual investors to determine how to invest their money.

Industry organization. The securities industry is organized by the types of products and services they produce. Investment banks help corporations to finance their operations by underwriting—or purchasing and reselling—new stock and bond issues. They also provide advisory services to companies who are issuing securities or undergoing a merger or acquisition. The typical investment bank has several departments, each of which specializes in a specific part of the process. Corporate finance specializes in structuring stock and bond issues. They are often involved in initial public offerings (IPOs) of the stock of companies that are selling to the public for the first time. Mergers and acquisitions departments help companies plan and manage the purchase of other companies. Sales and trading departments work together to sell underwritten securities to investors. Research and quantitative analytics departments specialize in studying company financial reports to help the bank and its customers make informed decisions about stock purchases.

Securities and commodities exchanges offer a central location where buyers and sellers of securities meet to trade securities and commodities. All of the major exchanges have been at least partially computerized, but the trading floors are still very active. While a small number of workers at the exchanges are actually employed by the exchanges themselves, most of the people who work there are actually employed by other firms. These include investment banking and brokerage firms, as well as specialist firms that manage the sale of securities for listed companies.

Brokerage firms trade securities for those who cannot directly trade on exchanges. Investors place their buy and sell orders by telephone, online, or through a broker. Since most brokerage firms are fairly large, many orders are filled by other buyers and sellers who use the same brokerage. If the stock or commodity is sold on an exchange, the firm may send the order electronically to the company’s floor broker at the exchange. The floor broker then posts the order and executes the trade by finding a seller or buyer who offers the best price for the client. Alternatively, the broker can access an electronic market that lists the prices for which dealers in that particular security are willing to buy or sell it. If the broker finds an acceptable price, then a purchase or sale is made. Firms can also buy and sell securities and commodities on electronic communications networks (ECNs), which are powerful computer systems that automatically list, match, and execute trades, eliminating the floor broker.

Brokerage firms are usually classified as full-service or discount. Investors who do not have time to research investments on their own will likely rely on full-service brokers to help them construct investment portfolios, manage their investments, and make recommendations regarding which investments to buy. Full-service brokers have access to a wide range of reports and analyses developed by financial analysts who research companies and recommend investments to people with different financial needs. People who prefer to select their own investments often use discount or online brokerages and pay lower fees and commission charges. Discount firms, also known as wire houses, usually do not offer advice about specific securities, although they may still provide access to reports. Most brokerage firms now have call centers staffed with both licensed sales agents and customer service representatives who take orders and answer questions at all hours of the day.

Investment advisory firms are also included in this industry. Much like full-service brokerages, these firms provide advice to their investors on how to best manage their investments. However, they also provide advice on other matters, such as life insurance, estate planning and tax preparation. In exchange, advisors act as brokers and receive fees and commissions for investments and insurance purchases. They may also charge fees for consultations.

Portfolio management firms, such as mutual funds, hedge funds, and private banks manage a pool of money for investors in exchange for fees. This frees individual investors from having to manage their own portfolios and puts their money in the hands of experienced professionals. In a mutual fund, this pool of money comes from investors who purchase shares of the mutual fund. Hedge funds are similar, although their shares are only available to certain experienced investors—called accredited investors—as they are considered very risky. In private banks, the pool of money comes from a wealthy individual. Portfolio management companies have teams of financial analysts who determine which securities should be bought and sold.

Recent developments. The securities industry is continuously changing because of improvements in technology, regulatory changes, the globalization of the marketplace, and demographics. The Internet and private high-speed networks have dramatically altered the way in which securities and commodities are bought and sold, almost completely automating the transaction process. At the same time, the number of financial services being offered is rising as firms look for new ways to attract the business of an increasingly wealthy and investment-savvy public.

New technology has greatly changed the way securities are traded. The growth of online trading in particular has produced a number of online trading firms. In order to compete, many full-service brokerage firms offer online trading to their customers. This explosion in technology is changing the nature of many of the jobs and the mix of people employed by securities firms. Some companies are more likely to resemble information technology companies than securities firms, with most of the employees working in computer-related occupations. Across the industry, computer professionals account for a greater proportion of the workforce. Moreover, with so much business now being conducted online and through call centers, traditional sales agents are spending less time processing orders and more time seeking out new clients and offering detailed advice.

Regulatory changes also are a major development for the industry. The Securities and Exchange Commission (SEC) and major stock exchanges have instituted accounting and corporate reforms to increase public confidence in investment markets, but they have meant more paperwork and compliance issues for securities firms. These new rules address conflicts-of-interest raised by Federal, State, and industry investigations of companies that later failed, or whose stock declined dramatically in value, costing investors billions of dollars. The SEC now requires corporate chief executive officers to certify the reliability of their companies’ financial reports. All of these new regulations have meant more paperwork and compliance issues for securities firms. On the other hand, the recent merger of the New York Stock Exchange Regulation with the National Association of Securities Dealers should ease some of the licensing and regulations burden for firms.

Working Conditions

Hours. Long working hours, including evenings and weekends, are common in the securities industry. About 1 in 4 employees worked 50 or more hours per week in 2006. Even when not working, professionals in the industry must keep abreast of events that may affect the markets in which they specialize. Opportunities for part-time work are limited—only about 9 percent worked part time, compared to 15 percent of workers in all industries combined.

Hours vary greatly among the different parts of the industry. Investment banks, for instance, are known for requiring extremely long hours from their entry-level workers. Portfolio management companies also require long hours for their workers. In contrast, workers in many brokerages work standard 40 hour workweeks or less. Workers in jobs that are closely attached to the market do most of their work while the major exchanges are open between 9:30 am and 4 pm, but this is changing as after hours and international trading are becoming more important.

Work environment. Most workers in the securities industry enjoy comfortable office environments. Investment banks are known for their exceptionally long hours and the stressful work environment. They are often under great pressure to meet deadlines and generate new business. This is often balanced, however, by large salaries. Some jobs require extensive travel, especially in corporate finance and mergers and acquisitions departments. Most investment banks strongly emphasize teamwork, and as such they often promote socialization among staff members. Because customer relationships are so important, investment bankers often get to take their clients to exclusive restaurants, sporting events, and other exclusive places

Brokerage jobs vary greatly depending on the type of brokerage. Those working in full-service brokerages tend to have comfortable office environments where they meet with clients and make sales calls. They may travel for training, conventions, or to meet with important clients.

During the day, sales agents spend most of their time on the phone soliciting business or with customers. They may spend time after hours and during lunch meeting with top clients. Sales agents at brokerage and mutual fund companies increasingly work in call centers, opening accounts for individuals, entering trades, and providing advice over the phone on different investment products. This is almost exclusively true in discount brokerages. Although many simply respond to inquiries and do not actively solicit customers, others may be required to contact potential clients. Call centers also employ customer service representatives, who answer questions for current clients about their accounts and make any needed changes or transfers. All workers in call centers must maintain a professional and courteous attitude, work well under pressure, and be able to speak for long periods of time. Many call centers operate 24 hours a day, 7 days a week, and employees may be required to work evenings and weekends.

Traders, whether on the floor of an investment bank, brokerage firm, or at the exchanges, work in very loud and stressful environments. They not only take orders from clients and try to get the best price for them, but also must constantly keep an eye on market activity and stay in touch with other traders and brokers to know what prices are being offered. Trading jobs are very stressful because a mistake could potentially cost the firm or the client thousands or even millions of dollars.

Personal financial advisors work in professional office environments. Most work between 40 and 50 hours per week, but many accommodate clients by visiting them at their homes in the evenings or on weekends. Office and administrative support workers usually work a 40-hour week, but overtime may be necessary during times of heavy trading.

Portfolio management companies, like investment banks, are often very high-stress, high pressure places to work. As with most parts of the securities industry, timing is critical and opportunities can be missed quickly. Compensation and job security are tied directly to performance.


The securities, commodities, and other investments industry employed 816,000 wage and salary workers in 2006. With their extensive networks of retail sales representatives located in branch offices throughout the country, the large nationally known brokerage companies have the greatest share of jobs in the industry (table 1) where they operate the majority of establishments. About three-fourths of the establishments in the industry employ fewer than 5 workers. However, many of the industry’s jobs are in the headquarters of major firms. About 1 in 4 workers in the securities industry is located in the New York metropolitan area.

Table 1. Percent distribution of employment and establishments in securities, commodities and other investments by detailed industry sector, 2006
Industry segment Employment Establishments


100.0 100.0

Contracts intermediation and brokerage

61.0 41.0

Securities brokerage

36.4 25.0

Investment banking and securities dealing

21.6 12.2

Commodity contracts brokerage

1.6 2.0

Commodity contracts dealing

1.3 1.7

Security and commodity exchanges

1.1 0.3

Other financial investment activities

37.9 58.7

Investment advice

14.9 32.1

Portfolio management

14.7 15.7

All other financial investment activities

5.4 3.9

Miscellaneous intermediation

3.0 7.0

Occupations in the Industry

Securities industry employees are concentrated in a variety of financial and sales occupations that analyze and sell financial instruments. Other employees support these roles, mainly as clerks, administrative support workers, and computer specialists (table 2).

Sales and related occupations. Workers in sales and related occupations account for 1 in 5 wage and salary jobs in this industry. These include investment bankers, sales agents, traders, exchange workers, stock brokers, and investment advisors, among others.

Investment bankers are among the most prestigious workers in the industry. Those in corporate finance work directly with companies who are issuing stock or bonds to help them structure those offerings. This includes everything from determining the value of the company to deciding how many shares should be released. Workers in mergers and acquisitions assist firms plan mergers with other companies. This includes analysis of which target companies to consider, how to fund acquisitions, and how to structure the resulting company’s stock. Those in sales departments call investors to offer stocks and bonds that the bank has underwritten, while traders execute the transactions.

A very small number of people work directly on the floor of stock and commodities exchanges. Floor brokers execute trades as directed by their firms’ trading departments. Independent brokers represent themselves, rather than a firm, and are often on hand to perform trades when floor brokers are too busy. Specialists, or market makers, are the auctioneers who work as a bridge between buyers and sellers. Each stock listed on the exchange has one of these workers on hand to assure fair trading. They also provide liquidity by buying stock when demand is low or selling stock when demand is too high.

Brokers are the people who sell stocks to individuals. They take buy and sell orders from customers and execute those trades through their firms’ trading departments. This position can vary greatly depending on the type of brokerage. In a discount brokerage or wire house, brokers may work in a call center environment, where they answer calls as they come in. In full-service brokerages, another type of broker often called an investment advisor is more typical. Investment advisors go beyond just buying and selling to give advice to their customers. They may also meet with their clients in person to discuss their needs and desire to avoid risk.

Office and administrative support occupations. Keeping track of transactions and paperwork constitutes a large portion of the work in this industry, which is why its largest major occupational group is office and administrative support workers. Brokerage clerks, the largest occupation in this category, handle much of the day-to-day operations within a brokerage firm. A type of brokerage clerk, called a sales assistant, takes calls from brokers’ clients, writes up order tickets and enters them into the computer. They also handle the paperwork for new accounts, inform clients of stock prices, and perform other tasks as needed. Most sales assistants obtain licenses to sell securities, allowing them to call brokers’ clients with recommendations from the broker regarding specific investments.

Because more clients are choosing to trade without the use of sales agents or brokers, customer service representatives now play a larger role in securities firms. While some may have licenses to sell securities or other financial products, most are not in the business of sales or offering advice, but rather they mainly take questions from current customers. Customer service representatives usually work in central call centers, where they handle account transfers, redemptions, and address changes; answer tax questions; and help clients navigate the Web, among other services.

Management, business, and financial occupations. This category includes a wide range of jobs that require expertise in finance and investment policy, including accountants and auditors, who prepare the firms’ financial statements, and general and operations managers, who manage the businesses. The largest occupations in this area, however, are financial analystspersonal financial advisors. and

Financial analysts generally work in the research departments of securities firms. They are especially common in investment banks and portfolio management firms, but also may work in brokerages. They review financial statements of companies, evaluate economic and market trends, and make recommendations concerning the potential profits from investments in specific companies. Financial analysts examine company financial reports, such as balance sheets and income statements, to determine fair market value. Those in large firms usually specialize in a certain industry sector, such as transportation; in a product type, such as bonds; or in a region, such as Latin America.

Personal financial advisors, also called financial planners, provide advice to both individuals and businesses on a broad range of financial subjects, such as investments, retirement planning, tax management, estate planning, and employee benefits. They may take a comprehensive approach to the client’s financial needs or specialize in a particular area, such as retirement planning. Advisors also may buy and sell financial products on behalf of their clients, such as stocks, bonds, mutual funds, and insurance. Private bankers and wealth managers are personal financial advisors who work with wealthy clients. These specialists may take a very active role in their clients’ finances, authorizing payments and trades, and writing checks on behalf of the client’s account.

Financial managers are employed throughout the industry. They prepare financial documents for the regulatory authorities and direct firms’ investment policies. In many departments, managers act as senior advisors and oversee teams of junior analysts or brokers while continuing to be actively involved in working out deals with clients.

The increasingly computerized environment in this industry also requires the expertise of computer software engineers, computer programmers, and other computer specialists to develop and operate the communications networks that provide online trading.

Table 2. Employment of wage and salary workers in securities, commodities, and other investments by occupation, 2006 and projected change, 2006-2016.
(Employment in thousands)
Occupation Employment, 2006 Percent
Number Percent

All occupations

816 100.0 46.1

Management, business, and financial occupations

268 32.8 57.9

General and operations managers

15 1.8 30.2

Marketing and sales managers

10 1.2 45.6

Computer and information systems managers

8 1.0 45.5

Financial managers

33 4.1 45.6

Compliance officers, except agriculture, construction, health and safety, and transportation

6 0.7 43.6

Human resources, training, and labor relations specialists

6 0.7 49.9

Management analysts

6 0.8 44.8

Accountants and auditors

21 2.6 52.2

Financial analysts

48 5.9 68.9

Personal financial advisors

72 8.8 78.8

Professional and related occupations

84 10.3 55.7

Computer programmers

6 0.8 15.8

Computer software engineers

21 2.6 72.4

Computer support specialists

8 1.0 42.8

Computer systems analysts

10 1.2 58.4

Network and computer systems administrators

6 0.8 58.2

Market research analysts

7 0.9 45.1


4 0.5 43.8

Sales and related occupations

184 22.5 35.6

Securities, commodities, and financial services sales agents

166 20.4 35.2

Office and administrative support occupations

273 33.4 38.7

First-line supervisors/managers of office and administrative support workers

18 2.2 35.1

Bookkeeping, accounting, and auditing clerks

18 2.2 43.7

Brokerage clerks

55 6.8 25.7

Customer service representatives

34 4.1 68.9

Receptionists and information clerks

7 0.8 44.1

Executive secretaries and administrative assistants

43 5.3 44.5

Secretaries, except legal, medical, and executive

20 2.5 28.0

Office clerks, general

44 5.4 44.1

Note: Columns may not add to totals due to omission of occupations with small employment

Training and Advancement

The securities, commodities, and other investments industry has one of the most highly educated and skilled workforces of any industry. About 2 out of 3 workers have bachelors’ or higher degrees. The requirements for entry are high—even brokerage clerks often have college degrees. The most successful workers at all levels have an aptitude for working with numbers and a keen interest in investing.

Licensure. Many people in the industry must be licensed by the Financial Industry Regulatory Authority (FINRA) before they can legally sell securities or recommend specific investments. To be licensed, brokers and assistants must pass an examination that tests their knowledge of investments. Various licenses are available for different investment products. The most common is the Series 7 license, which allows agents to act as registered representatives of a firm. The Series 63 and 66 licenses, which allow their holders to legally give financial advice, are also very common.

Investment banking and securities dealing. Investment bankers are expected to have very strong educational backgrounds, including courses in finance, accounting, and economics. A competitive candidate will combine strong quantitative skills with good interpersonal skills and the ability to work in teams. Success in a competitive internship can also be very helpful.

Most investment banks have a standardized system of advancement. Recent college graduates start out as analysts. Assignments to these positions usually last 2 to 3 years and involve a great deal of training. Analysts do the routine work of the investment bank, and generally spend much of their time working in teams. Those who succeed are promoted to similar jobs at the associate level, where they have more responsibilities and may even act as team leaders. Recent business school graduates often start at the associate level.

Successful associates are generally promoted to the title of vice president. At this stage, employees are much more trusted by the investment bank, and begin to spend more of their time dealing directly with customers. Top vice presidents may become directors or executive directors after a few years. Because there are fewer of these, many vice presidents move to different firms to get to this level. At the very top of the structure is the managing director, a highly coveted and well paid position, with a great deal of authority.

Securities brokerage and Investment advice. There are many paths of entry into brokerages. Many professionals in this industry begin their careers as sales assistants. Others transfer from sales or financial careers in a different industry. This path is often more successful, as people who have had other careers generally know more people and can find clients quickly. A third group enters directly into a broker training program. The Series 7 and 63 or 66 licenses are required for most brokers. Generally new workers are given a fair amount of training, which helps them to better understand the various products, as well as to learn how to properly execute trades and analyze financial statements.

For securities, commodities, and financial services sales agent jobs, a college education is increasingly important, although not essential, because it helps the sales agent to understand economic conditions and trends. The overwhelming majority of entrants to this occupation are college graduates but many employers consider personal qualities and skills, such as self-motivation and the ability to handle rejection, to be more important than academic training.

Brokers earn a significant portion of their salaries through commissions and many successful brokers build and maintain a large client base. The larger and wealthier the client base, the more money the broker earns. On the other hand, many brokers opt to open their own branches of securities firms or become personal financial advisors. While this generally carries more risks, it can also be very lucrative.

Although there are no specific licensure requirements for personal financial advisors, most must be knowledgeable about economic trends, finance, budgeting, and accounting. Therefore, a college education is important. Personal financial advisors must possess excellent communication and interpersonal skills to be able to explain complicated issues to their clients. Many advisors entering the field earn a Certified Financial Planner credential. To receive this designation, a person must pass an exam on insurance, investments, tax planning, employee benefits, and retirement and estate planning. They also must have 3 years of experience in a related field and an accredited college degree and must agree to abide by the rules and regulations issued by the Board of Standards. Like brokers, personal financial advisors advance by increasing their client base or opening branch offices.

Portfolio management. Entry-level portfolio management positions are filled by college graduates, most of whom have majored in business administration, marketing, economics, accounting, industrial relations, or finance. Analysts usually start with a training program that helps them to understand the complexities of securities analysis. After this training period, they join a team which specializes in a specific product, industry, or region. Successful analysts are given more responsibilities and greater influence. They may be put in charge of more important specialties, or become team leaders. Those who are not successful may be asked to leave the firm. Top analysts are often promoted to portfolio manager or fund manager and take on responsibility for the mix of products in the portfolio and have ultimate say in its composition.

Those working as financial analysts are encouraged to obtain the Chartered Financial Analyst (CFA) designation sponsored by the CFA Institute. To qualify, applicants must have at least 4 years of applicable experience and pass a series of 3 rigorous essay exams requiring an extensive knowledge of many fields, including accounting, economics, and security valuation, risk management, and portfolio management..


The securities, commodities, and other investments industry should experience employment growth between 2006 and 2016, but competition for jobs in the industry will be quite keen.

Employment change. Wage and salary employment in the securities, commodities, and other investments industry is projected to rise 46 percent from 2006 to 2016, compared to the 11 percent increase across all industries. Employment growth will be driven by increasing levels of investment in securities and commodities in the global marketplace, as well as the growing need for investment advice.

Over the projections decade, the baby boom generation will move from their peak saving years to their first years of retirement. More retirement savings will be managed by the retirees themselves because most companies have moved from defined benefit plans—such as traditional pensions—to defined contribution plans—such as 401(k) programs and Roth IRAs. This will continue to boost the stock and bond markets, as well as mutual funds and investment advisory as retirees look for reliable investments.

Another factor contributing to projected employment growth is the globalization of securities and commodities markets—the extension of traditional exchange and trading boundaries into new markets in foreign countries. Recent developments, from the rapid growth of Asian economies to the recent merger of the New York Stock Exchange and Euronext, will continue to make Americans more eager to invest abroad and at the same time encourage investors in other nations to purchase U.S securities.

Online trading will grow and reduce the need for direct contact with actual brokers, but the number of investment advisors is nevertheless expected to increase as many people remain willing to pay for the guidance that a full-service representative can offer. Employment of personal financial advisors is also expected to increase rapidly. As the complexity of financial planning grows, individuals will continue to look to experts to help them manage their money.

Financial analyst positions are also expected to grow modestly. Globalization and the growth of developing countries will provide a multitude of investment opportunities, and financial analysts with knowledge of foreign accounting standards and economies will be needed to examine these investments. Furthermore, the growth of mutual funds, hedge funds, and other large-scale investments will continue to create jobs in this occupation.

Advances in telecommunications and computer technology will continue to shape the industry as companies look for faster and more secure ways to perform tasks. Computer programmers and information systems managers will continue to have important roles in this industry as trading and the recordkeeping that supports trading become more automated, while the jobs of brokerage clerks will become less clerical and have more high-level tasks. More clerks will be licensed and expected to work more independently.

Compliance is a rising concern for companies, as various scandals have rocked the industry over the past several years. While the merger of NASD with NYSE Regulation creating FINRA should provide some relief for companies, the amount of oversight from both private regulators and the Securities and Exchange Commission (SEC) continues to increase. This will continue to lead to greater employment of lawyers and compliance specialists, as well as recordkeeping clerks.

Job prospects. Despite continued growth in the securities industry, keen competition is expected for most jobs. This will be especially true for jobs in the upper echelons of the industry that have extremely high earnings. Jobs in investment banks, exchanges, and fund management companies will be especially difficult to enter. Positions at regional securities firms and brokerages will be somewhat more accessible.

Prospects will be best for graduates from 4-year degree programs from nationally recognized universities and colleges. Companies value a background in accounting, finance, and economics. Successful completion of a recognized internship program may also be very helpful to beginners. Earning a Master’s of Business Administration degree or one of the professional certifications recognized in the industry are important assets for advancement.


Industry earnings. In May 2006, the average weekly earnings of nonsupervisory workers in the industry were $1055 compared with $568 in all industries combined. Median earnings for the largest occupations in the securities, commodities, and other investments industry in May 2006 are shown in table 3.

Table 3. Median hourly earnings of the largest occupations in securities, commodities, and other investments, May 2006
Occupation Securities, commodities, and other investments All industries

Financial managers

$63.52 $43.74

Securities, commodities, and financial services sales agents

40.24 32.93

Financial analysts

38.97 32.02

Personal financial advisors

34.89 31.79

Accountants and auditors

29.65 26.26

Executive secretaries and administrative assistants

20.92 17.90

Brokerage clerks

17.90 17.50

Customer service representatives

16.65 13.62

Secretaries, except legal, medical, and executive

14.60 13.20

Office clerks, general

11.48 11.40

Earnings of many securities industry employees—especially those working in sales positions—depend on commissions from the sale or purchase of securities. Commissions are likely to be lower during recessionary periods or when there is a slump in market activity. Earnings can also be based on the amount of assets that a broker or portfolio manager has under his or her management, with the broker or portfolio manager receiving a small percentage of the value of the assets.

In other positions, a large part of annual earnings are paid in the form of an annual bonus based on the success of the firm or the individual’s team. This is particularly common in investment banks and portfolio management companies. Profit sharing and stock options are also common.

Benefits and union membership. Most workers in the industry receive substantial benefits packages, including health insurance, retirement programs, and reimbursement of expenses associated with company travel or entertainment of clients. Additionally, top employees often receive perks, such as opportunities to eat at expensive restaurants and attend sporting events. Those who travel receive frequent flyer miles and hotel points which can be redeemed for personal use. Most of these opportunities come as a result of the need to connect with clients and make sales, however many workers consider them to be a significant benefit of the job.

Union membership is very low in this industry, and does not affect the salaries or benefits of workers.

Financial Activities on Insurance


Significant Points
  • Job growth in this large industry will be limited by corporate downsizing, new technology, and increasing direct mail, telephone, and Internet sales, but numerous job openings will arise from the need to replace workers who leave or retire.
  • Growing areas of the insurance industry are medical services and health insurance, and its expansion into other financial services, such as securities and mutual funds.
  • Jobs in office and administrative occupations usually may be entered with a high school diploma, but employers prefer college graduates for sales, managerial, and professional jobs.
Nature of the Industry

Goods and services. The insurance industry provides protection against financial losses resulting from a variety of perils. By purchasing insurance policies, individuals and businesses can receive reimbursement for losses due to car accidents, theft of property, and fire and storm damage; medical expenses; and loss of income due to disability or death.

Industry organization. The insurance industry consists mainly of insurance carriers (or insurers) and insurance agencies and brokerages. In general, insurance carriers are large companies that provide insurance and assume the risks covered by the policy. Insurance agencies and brokerages sell insurance policies for the carriers. While some of these establishments are directly affiliated with a particular insurer and sell only that carrier’s policies, many are independent and are thus free to market the policies of a variety of insurance carriers. In addition to supporting these two primary components, the insurance industry includes establishments that provide other insurance-related services, such as claims adjustment or third-party administration of insurance and pension funds.

These other insurance industry establishments also include a number of independent organizations that provide a wide array of insurance-related services to carriers and their clients. One such service is the processing of claims forms for medical practitioners. Other services include loss prevention and risk management. Also, insurance companies sometimes hire independent claims adjusters to investigate accidents and claims for property damage and to assign a dollar estimate to the claim.

Insurance carriers assume the risk associated with annuities and insurance policies and assign premiums to be paid for the policies. In the policy, the carrier states the length and conditions of the agreement, exactly which losses it will provide compensation for, and how much will be awarded. The premium charged for the policy is based primarily on the amount to be awarded in case of loss, as well as the likelihood that the insurance carrier will actually have to pay. In order to be able to compensate policyholders for their losses, insurance companies invest the money they receive in premiums, building up a portfolio of financial assets and income-producing real estate which can then be used to pay off any future claims that may be brought. There are two basic types of insurance carriers: primary and reinsurance. Primary carriers are responsible for the initial underwriting of insurance policies and annuities, while reinsurance carriers assume all or part of the risk associated with the existing insurance policies originally underwritten by other insurance carriers.

Primary insurance carriers offer a variety of insurance policies. Life insurance provides financial protection to beneficiaries—usually spouses and dependent children—upon the death of the insured. Disability insurance supplies a preset income to an insured person who is unable to work due to injury or illness, and health insurance pays the expenses resulting from accidents and illness. An annuity (a contract or a group of contracts that furnishes a periodic income at regular intervals for a specified period) provides a steady income during retirement for the remainder of one’s life. Property-casualty insurance protects against loss or damage to property resulting from hazards such as fire, theft, and natural disasters. Liability insurance shields policyholders from financial responsibility for injuries to others or for damage to other people’s property. Most policies, such as automobile and homeowner’s insurance, combine both property-casualty and liability coverage. Companies that underwrite this kind of insurance are called property-casualty carriers.

Some insurance policies cover groups of people, ranging from a few to thousands of individuals. These policies usually are issued to employers for the benefit of their employees or to unions, professional associations, or other membership organizations for the benefit of their members. Among the most common policies of this nature are group life and health plans. Insurance carriers also underwrite a variety of specialized types of insurance, such as real-estate title insurance, employee surety and fidelity bonding, and medical malpractice insurance.

Other organizations in the industry are formed by groups of insurance companies, to perform functions that would result in a duplication of effort if each company carried them out individually. For example, service organizations are supported by insurance companies to provide loss statistics, which the companies use to set their rates.

Recent developments. Congressional legislation now allows insurance carriers and other financial institutions, such as banks and securities firms, to sell one another’s products. More insurance carriers now sell financial products such as securities, mutual funds, and various retirement plans. This approach is most common in life insurance companies that already sold annuities, but property and casualty companies also are increasingly selling a wider range of financial products. In order to expand into one another’s markets, insurance carriers, banks, and securities firms have engaged in numerous mergers, allowing the merging companies access to each other's client base and geographical markets.

Insurance carriers have discovered that the Internet can be a powerful tool for reaching potential and existing customers. Most carriers use the Internet simply to post company information, such as sales brochures and product information, financial statements, and a list of local agents. However, an increasing number of carriers are starting to expand their Web sites to enable customers to access online account and billing information, and some carriers even allow claims to be submitted online. Many carriers also provide insurance quotes online based on the information submitted by customers on their Internet sites. In fact, some carriers will allow customers to purchase policies through the Internet without ever speaking to a live agent.

In addition to individual carrier-sponsored Internet sites, several “lead-generating” sites have emerged. These sites allow potential customers to input information about their insurance policy needs. For a fee, the sites forward customer information to a number of insurance companies, which review the information and, if they decide to take on the policy, contact the customer with an offer. This practice gives consumers the freedom to accept the best rate.

Working Conditions

Hours. Many workers in the insurance industry—especially those in administrative support positions—work a 5-day, 40-hour week. Those in executive and managerial occupations often put in more than 40 hours. There are several occupations in the insurance industry where workers may work irregular hours outside of office settings. Those working in sales jobs need to be available for their clients at all times. This accommodation may result in these individuals working 50 to 60 hours per week. Also, call centers operate 24 hours a day, 7 days a week, so some of their employees must work evening and weekend shifts. The irregular business hours in the insurance industry provide some workers with the opportunity for part-time work. Part-time employees make up 8 percent of the workforce.

Work environment. Insurance employees working in sales jobs often visit prospective and existing customers’ homes and places of business to market new products and provide services. Others working in the industry may need to frequently leave the office to inspect damaged property, and at times can be away from home for days, traveling to the scene of a disaster—such as a tornado, flood, or hurricane—to work with affected policyholders and government officials.

A small, but increasing, number of insurance employees spend most of their time on the telephone working in call centers, answering questions and providing information to prospective clients or current policyholders. These jobs may include selling insurance, taking claims information, or answering medical questions.

As would be expected in an industry dominated by office and sales employees, the incidence of occupational injuries and illnesses among insurance workers is low. In 2006, only 1.3 cases per 100 full-time workers were reported among insurance carriers, while just 0.7 cases per 100 full-time workers were reported among agents and brokers. These figures compare with an average of 4.4 for all private industry.


The insurance industry had about 2.3 million wage and salary jobs in 2006. Insurance carriers accounted for 62 percent of jobs, while insurance agencies, brokerages, and providers of other insurance-related services accounted for 38 percent of jobs.

The majority of establishments in the insurance industry were small; however, a few large establishments accounted for many of the jobs in this industry. Insurance carriers tend to be large establishments, often employing 250 or more workers, whereas agencies and brokerages tend to be much smaller, frequently employing fewer than 20 workers (chart 1).

Many insurance carriers’ home and regional offices are situated near large urban centers. Insurance workers who deal directly with the public are located throughout the country. Almost all of those working in sales work out of local company offices or independent agencies. Many others in the industry work for independent firms in small cities and towns throughout the country.

Occupations in the Industry

About 44 percent of insurance workers are in office and administrative support jobs such as those found in every industry (table 1). Many office and administrative support positions in the insurance industry, however, require skills and knowledge unique to the industry. About 29 percent of insurance workers are in management or business and financial operations occupations. About 16 percent of wage and salary employees in the industry are sales workers, selling policies to individuals and businesses. Several others are employed in computer and mathematical science occupations.

Office and administrative support occupations. Office and administrative support occupations in this industry include secretaries, typists, word processors, bookkeepers, and other clerical workers. Secretaries and administrative assistants perform routine clerical and administrative functions such as drafting correspondence, scheduling appointments, organizing and maintaining paper and electronic files, or providing information to callers. Bookkeeping, accounting, and auditing clerks handle all financial transactions and recordkeeping for an insurance company. They compute, classify, update, and record numerical data to keep financial records complete and accurate. Insurance claims and policy processing clerks process new policies, modifications to existing policies, and claims forms. They review applications for completeness, compile data on policy changes, and verify the accuracy of insurance company records. Customer service representatives have duties similar to insurance claims and policy processing clerks, except they work directly with customers by processing insurance policy applications, changes, and cancellations over the phone. They may also process claims and sell new policies to existing clients. These workers recently are taking on increased responsibilities in insurance offices, such as handling most of the continuing contact with clients. A growing number of customer service representatives work in call centers that are open 24 hours a day, 7 days a week, where they answer clients’ questions, update policy information, and provide potential clients with information regarding the types of policies the company issues.

Management, business, and financial operations occupations. Top executives direct the operations of an independent insurance agency, brokerage, or a large insurance carrier. Marketing managers direct carriers’ development of new types of policies that might appeal to the public and strategies for selling them to customers. Sales managers direct the activities of the sales workers in local sales offices of insurance carriers and independent agencies. They sell insurance products, work with clients, and supervise staff. Other managers who work in their companies' home offices are in charge of functions such as actuarial calculations, policy issuance, accounting, and investments.

Claims adjusters, appraisers, examiners, and investigators decide whether claims are covered by the customer’s policy, estimate and confirm payment, and, when necessary, investigate the circumstances surrounding a claim. Claims adjusters work for property and liability insurance carriers or for independent adjusting firms. They inspect property damage, estimate how much it will cost to repair, and determine the extent of the insurance company’s liability; in some cases, they may help the claimant receive assistance quickly in order to prevent further damage and begin repairs. Adjusters plan and schedule the work required to process claims, which may include interviewing the claimant and witnesses and consulting police and hospital records. In some property-casualty companies, claims adjusters are called claims examiners, but in other companies, a claims examiner’s primary job is to review claims to ensure that proper guidelines have been followed. Only occasionally—especially when disasters suddenly increase the volume of claims—do these examiners aid adjusters with complicated claims.

In the offices of life and health insurance carriers, claims examiners are the counterparts of the claims adjuster who works in a property and casualty insurance firm. Examiners in the health insurance carriers review health-related claims to see whether the costs are reasonable based on the diagnosis. Examiners check claim applications for completeness and accuracy, interview medical specialists, and consult policy files to verify information on a claim. Claims examiners in the life insurance carriers review causes of death and also may review new applications for life insurance to make sure that the applicants have no serious illnesses that would prevent them from qualifying for insurance.

Insurance investigators handle claims in which companies suspect fraudulent or criminal activity, such as suspicious fires, questionable workers’ disability claims, difficult-to-explain accidents, and dubious medical treatment. Investigators usually perform database searches on suspects to determine whether they have a history of attempted or successful insurance fraud. Then, the investigators may visit claimants and witnesses to obtain a recorded statement, take photographs, inspect facilities, and conduct surveillance on suspects. Investigators often consult with legal counsel and are sometimes called to testify as expert witnesses in court cases.

Auto damage appraisers usually are hired by insurance companies and independent adjusting firms to inspect the damage to a motor vehicle after an accident and to provide unbiased estimates of repair cost. Claims adjusters and auto damage appraisers can work for insurance companies, or they can be independent or public adjusters. Insurance companies hire independent adjusters to represent their interests while assisting the insured, whereas public adjusters are hired to represent the insured’s interests against insurance carriers.

Management analysts, often called loss control representatives in the insurance industry, assess various risks faced by insurance companies. These workers inspect the business operations of insurance applicants, analyze historical data regarding workplace injuries and automobile accidents, and assess the potential for natural hazards, dangerous business practices, and unsafe workplace conditions that may result in injuries or catastrophic physical and financial loss. They might then recommend, for example, that a factory add safety equipment, that a house be reinforced to withstand environmental catastrophes, or that incentives be implemented to encourage automobile owners to install air bags in their cars or take more effective measures to prevent theft. Because the changes they recommend can greatly reduce the probability of loss, loss control representatives are increasingly important to both insurance companies and the insured.

Underwriting is another important management and business and financial occupation in insurance. Underwriters evaluate insurance applications to determine the risk involved in issuing a policy. They decide whether to accept or reject an application, and they determine the appropriate premium for each policy.

Sales and related occupations. Insurance sales agents, also referred to as producers, may work as exclusive agents, or captive agents, selling for one company, or as independent agents selling for several companies. Through regular contact with clients, agents are able to update coverage, assist with claims, ensure customer satisfaction, and obtain referrals. Insurance sales agents may sell many types of insurance, including life, annuities, property-casualty, health, and disability insurance. Many insurance sales agents are involved in “cross-selling” or “total account development,” which means that, besides offering insurance, they have become licensed to sell mutual funds, annuities, and other securities. These agents usually find their own customers and ensure that the policies sold meet the specific needs of their policyholders.

Professional and related occupations. The insurance industry employs relatively few people in professional and related occupations, but they are essential to company operations. For example, insurance companies’ lawyers defend clients who are sued, especially when large claims may be involved. These lawyers also review regulations and policy contracts. Nurses and other medical professionals advise clients on wellness issues and on medical procedures covered by the company’s managed-care plan. Computer systems analysts, computer programmers, and computer support specialists are needed to analyze, design, develop, and program the systems that support the day-to-day operations of the insurance company.

Actuaries represent a relatively small proportion of employment in the insurance industry, but they are vital to the industry’s profitability. Actuaries study the probability of an insured loss and determine premium rates. They must set the rates so that there is a high probability that premiums paid by customers will cover claims, but not so high that their company loses business to competitors.

Table 1. Employment of wage and salary workers in insurance by occupation, 2006 and projected change, 2006-2016.
(Employment in thousands)
Occupation Employment, 2006 Percent
Number Percent

All occupations

2,316 100.0 7.4

Management, business, and financial occupations

661 28.6 8.3

General and operations managers

41 1.8 -1.9

Marketing and sales managers

20 0.9 7.2

Computer and information systems managers

14 0.6 5.9

Financial managers

24 1.0 6.6

Claims adjusters, examiners, and investigators

218 9.4 10.8

Insurance appraisers, auto damage

12 0.5 12.0

Human resources, training, and labor relations specialists

28 1.2 10.9

Management analysts

29 1.2 5.4

Accountants and auditors

40 1.7 7.8

Financial analysts

16 0.7 16.9

Insurance underwriters

91 3.9 5.6

Professional and related occupations

258 11.2 8.6

Computer programmers

21 0.9 -15.1

Computer software engineers

28 1.2 24.7

Computer support specialists

19 0.8 6.8

Computer systems analysts

33 1.4 15.5


11 0.5 5.4

Market research analysts

12 0.5 6.5


12 0.5 5.6

Title examiners, abstractors, and searchers

23 1.0 -5.5

Registered nurses

25 1.1 6.2

Sales and related occupations

367 15.8 14.4

First-line supervisors/managers of non-retail sales workers

18 0.8 3.8

Insurance sales agents

313 13.5 15.7

Office and administrative support occupations

1,009 43.6 4.0

First-line supervisors/managers of office and administrative support workers

62 2.7 -6.0

Billing and posting clerks and machine operators

18 0.8 -2.5

Bookkeeping, accounting, and auditing clerks

47 2.0 8.9

Customer service representatives

266 11.5 19.2

File clerks

15 0.7 -45.3

Receptionists and information clerks

24 1.0 10.0

Executive secretaries and administrative assistants

57 2.4 8.2

Secretaries, except legal, medical, and executive

62 2.7 -1.5

Data entry keyers

22 0.9 -13.5

Insurance claims and policy processing clerks

222 9.6 -2.6

Mail clerks and mail machine operators, except postal service

14 0.6 -21.0

Office clerks, general

106 4.6 7.8

Note: Columns may not add to totals due to omission of occupations with small employment

Training and Advancement

A few jobs in the insurance industry, especially in office and administrative support occupations, require no more than a high school diploma. However, employers prefer to hire workers with a college education for most jobs, including sales, managerial, and professional jobs. When specialized training is required, it usually is obtained on the job or through independent study during work or after-work hours. Many insurance companies expect their employees to take continuing education courses to improve their people skills and their knowledge of the industry. Opportunities for advancement are relatively good in the insurance industry.

Office and administrative support occupations. Graduation from high school or a 2-year postsecondary business program is adequate preparation for most beginning office and administrative support jobs. Courses in word processing and business math are assets, and the ability to operate computers is essential. On-the-job training usually is provided for clerical jobs such as customer service representatives. Because representatives in call centers must be knowledgeable about insurance products in order to provide advice to clients, more States are requiring customer service representatives to become licensed. Several years of experience and training can help beginners advance to higher paying positions. Office and administrative support workers may also advance to higher paying claims adjusting positions and entry-level underwriting jobs.

Management, business, and financial operations occupations. Management, business, and financial jobs require the same college training as similar jobs in other industries. Managerial positions usually are filled by promoting college-educated employees from within the company. However, some companies prefer to hire liberal arts graduates at a lower cost, and many insurers send them to company schools or enroll them in outside institutes for professional training. A master’s degree, particularly in business administration or a related field, is an asset for advancement into higher levels of management.

For beginning underwriting jobs, many insurance companies prefer college graduates who have a degree in business administration or a related field. As an underwriter’s career develops, it becomes beneficial to earn one of the voluntary professional certifications in underwriting. For example, the National Association of Health Underwriters offers two certification programs: the Registered Health Underwriter (RHU) designation and the Registered Employee Benefits Consultant (REBC) designation

The American Institute for Chartered Property-Casualty Underwriters (AICPU) offers the CPCU program, which includes courses covering a broad range of insurance, risk management, and general business topics involving both personal and commercial loss exposures. Earning the CPCU designation requires passing 8 exams, meeting a requirement of at least three years of insurance experience, and abiding by the AICPU’s and CPCU Society’s code of professional ethics. In conjunction with the Insurance Institute of America, the AICPCU offers 22 insurance-related educational programs, including claims, underwriting, risk management, and reinsurance.

In almost every State, those working as a claims examiner or adjuster must obtain a license. Licensing requirements for these workers vary by State and can include prelicensing education or passing a licensing exam. In some cases, professional designations may be substituted for the exam requirement. Separate or additional requirements may apply to public adjusters. For example, some States may require public adjusters to file a surety bond. Often, claims adjusters working for companies can work under the company license and not need to become licensed themselves. Most companies prefer to hire college graduates and those with previous experience or who have obtained licensure for claims adjuster and examiner positions. No specific college major is required, although most workers in these positions have a business, accounting, engineering, legal, or medical background. In addition, many adjusters and examiners choose to pursue certain certifications and designations to distinguish themselves. Many State licenses and professional designations require continuing education for renewal. Continuing education is important because adjusters and examiners must be knowledgeable about changes in the laws, recent court decisions, and new medical procedures.

Auto damage appraisers typically begin as auto body repairers and then are hired by insurance companies or independent adjusting firms. Most companies prefer auto damage appraisers to have formal training, and many vocational colleges offer 2-year programs on how to estimate and repair damaged vehicles. Some States require them to be licensed, and certification may be required or preferred. Computer skills also are an important qualification for many auto damage appraiser positions. As with adjusters and examiners, continuing education is important for appraisers, because many new car models and repair techniques are introduced each year.

Licensing requirements to become an insurance investigator may vary among States. Most insurance companies prefer to hire former law enforcement detectives or private investigators as insurance investigators. Many experienced claims adjusters or examiners also can become investigators. Most employers look for individuals with ingenuity and who are persistent and assertive. Investigators must not be afraid of confrontation, should communicate well, and should be able to think on their feet. Good interviewing and interrogation skills also are important and usually are developed in earlier careers in law enforcement.

Sales and related occupations. Although some employers hire high school graduates with potential or proven sales ability for entry-level sales positions, most prefer to hire college graduates.

All insurance sales agents must obtain licenses in the States in which they plan to sell insurance. In most States, licenses are issued only to applicants who complete specified courses and pass written examinations covering insurance fundamentals and State insurance laws. New agents receive training from their employer, either at work or at the insurance company’s home office. Sometimes, entry-level employees attend company-sponsored classes to prepare for examinations. The National Alliance for Insurance Education and Research offers a wide variety of courses in health, life, and property and casualty insurance for independent insurance agents. Others study on their own and, as on-the-job training, accompany experienced agents when they meet with prospective clients. After obtaining a license, agents must earn continuing education credits throughout their careers in order to remain licensed insurance sales agents.

Insurance sales agents wishing to sell securities and other financial products must meet State licensing requirements in these areas. Specifically, they must pass an additional examination—either the Series 6 or Series 7 licensing exam, both of which are administered by the Financial Industry Regulatory Authority (FINRA). The Series 6 exam is for individuals who wish to sell only mutual funds and variable annuities; the Series 7 exam is the main FINRA series license and qualifies agents as general securities representatives. To demonstrate further competency in financial planning, many agents also find it worthwhile to obtain a certified financial planner (CFP) or chartered financial consultant (ChFC) designation.

Sales workers may advance by handling greater numbers of accounts and more complex commercial insurance policies. They may also choose to start an independent insurance agency. Many also obtain related designations such as the CPCU underwriting designation, offered by the AICPCU.

Professional and related occupations. For actuarial jobs, companies prefer candidates to have degrees in actuarial science, mathematics, or statistics. However, candidates with degrees in business, finance, or economics are becoming more common. Actuaries must pass a series of national examinations to become fully qualified. Completion of all the exams takes from 5 to 10 years. Some of the exams may be taken while an individual is in college, but most require extensive home study. Many companies grant study time to their actuarial students to prepare for the exams.

Out Look

Demand for insurance will increase, but employment in the insurance industry will increase more slowly than employment growth across all industries.

Employment change. Wage and salary employment in the insurance industry is projected to grow about 7 percent between 2006 and 2016, compared to the 11 percent growth projected for wage and salary employment in all industries combined. While demand for insurance is expected to rise, job growth will be limited by corporate downsizing, productivity increases due to new technology, and increasing use of direct mail, telephone, and Internet sales. However, some job growth will result from the industry’s expansion into the broader financial services field, new types of insurance entering the market, and growth in demand for medical service and health insurance.

Medical service and health insurance is the fastest growing segment of the insurance industry. Significant growth is expected over the long term, even though increasing health insurance premiums have recently become difficult for some people to afford. As the members of the baby boom generation grow older and a growing share of the Nation’s population moves into the older age groups, more people are expected to buy health insurance and long-term-care insurance, as well as annuities and other types of pension products sold by insurance sales agents. If legislation is enacted that makes health insurance affordable to more people, even greater increases in demand for this type of insurance should result.

Population growth also will stimulate demand for auto insurance and homeowners insurance. Also, population growth will create additional demand for businesses to service the needs of more people, and these businesses will need insurance as well. In addition, growing numbers of individuals and businesses are purchasing liability policies to protect against possible large liability awards from lawsuits brought by people claiming injury or damage from a product.

Many successful insurance companies will recognize the Internet’s potential as a powerful marketing tool, increasing employment growth of some occupations while slowing growth of others. Growing use of the Internet might reduce costs for insurance companies, but it also could enable many clients to turn first to the Internet to get information on their policies, obtain price quotes on possible new policies, or submit claims. As insurance companies begin to offer more information and services on the Internet, employment in some occupations, such as insurance sales agents, could be adversely affected.

Productivity gains caused by the greater use of computer software will continue to limit the growth of certain jobs within the insurance industry. For example, the use of underwriting software that automatically analyzes and rates insurance applications will limit the employment growth of underwriters. Workers in claims now may not have to visit the site of customers’ damage; they may use satellite imagery to inspect the damage from their computers. In addition, the Internet allows insurance investigators to handle an increasing number of cases by drastically reducing the amount of time it takes them to perform background checks, limiting the additional investigators that must be hired to handle a growing workload. Also, computers have made communications easier among sales agents, adjusters, and insurance carriers—making all much more productive—by linking them directly to the databases of insurance carriers and other organizations. Furthermore, insurance carriers contain costs by increasing using customer service representatives to deal with the day-to-day processing of policies and claims.

Job prospects. Workers in property and casualty insurance, particularly in auto insurance, will be most affected by increasing reliance on the Internet. Auto policies are relatively straightforward and can be issued more easily without the involvement of a live agent. Also, auto premiums tend to cost more per year than do other types of policies, so people are more likely to shop around for the best price—and the Internet makes it easier to compare rates among companies.

Insurance companies will continue to face increased competition from banks and securities firms entering the insurance markets. As more of these firms begin to sell insurance policies, they will employ increasing numbers of insurance sales agents. In order to stay competitive, more insurance companies are expanding the range of financial products and services they offer, or are establishing partnerships with banks or brokerage firms.

Although employment in the insurance industry is expected to grow slowly, thousands of openings are expected to arise in this large industry to replace workers who leave the industry, retire, or stop working for other reasons. Despite the fact that the internet allows many people to buy policies online, many sales agents still will be needed to meet face-to-face with clients; some customers prefer to talk directly with an agent, especially regarding complicated policies. Opportunities will be best for sales agents who sell more than one type of insurance or financial service. Opportunities should be good for adjusters because they will still be needed to inspect damage and interview witnesses as the insurance industry, the Nation’s population, and the number of claims all grow. Opportunities likewise should be good for actuaries, even though the number of available jobs will small, because many people are discouraged from following this career path due to the stringent qualifying requirements of the examination system.


Industry earnings. Weekly earnings of nonsupervisory workers in the insurance industry averaged $798 in May 2006, considerably higher than the average of $568 for all private industry. Earnings of the largest occupations in insurance in May 2006, appear in table 2.

Table 2. Median hourly earnings of the largest occupations in insurance, May 2006
Occupation Insurance All industries

General and operations managers

$53.02 $40.97

Insurance underwriters

25.29 25.17

First-line supervisors/managers of office and administrative support workers

24.36 20.92

Claims adjusters, examiners, and investigators

23.42 24.36

Executive secretaries and administrative assistants

18.70 17.90

Bookkeeping, accounting, and auditing clerks

15.55 14.69

Insurance claims and policy processing clerks

14.97 14.96

Customer service representatives

14.79 13.62

Secretaries, except legal, medical, and executive

12.65 13.20

Office clerks, general

11.38 11.40

The method by which insurance sales agents are paid varies greatly. Most independent sales agents own their own businesses and are paid a commission only. Sales agents who are employees of an agency may be paid a salary only, a salary plus commission, or a salary plus a bonus. An agent’s earnings usually increase rapidly with experience. Many agencies also pay an agent’s expenses for automobiles and transportation, travel to conventions, and continuing education.

Benefits and union membership. Insurance carriers offer attractive benefits packages, as is frequently the case with large companies. Yearly bonuses, retirement investment plans, insurance, and paid vacation often are standard. Insurance agencies, which generally are smaller, offer less extensive benefits.

Unionization is not widespread in the insurance industry. In 2006, 3 percent of all insurance workers were union members or were covered by union contracts, compared with 12 percent of workers throughout private industry.