Historically, insurance and real estate have shared common characteristics as career options. First, many people regard opportunities in these areas as sales opportunities. However, both fields offer a variety of career options. In addition to the traditional insurance careers in sales, investments, underwriting, and claims, insurers are becoming involved in a growing number of activities including rehabilitation of injured persons, product safety, industrial hygiene, research, training of commercial drivers, accident prevention, and consumer education. Real estate also is expanding to include real estate appraisal, property management, land development, urban planning, real estate securities and syndication, counseling, research, and mortgage financing.
Second, education and training requirements for insurance and real estate have not been as clear cut as other areas of business. While on-the-job training positions still exist, recent changes require people with more technical knowledge as well as financial backgrounds. To meet the demands, most two- and four-year colleges offer programs. Both the insurance and real estate fields offer opportunities for autonomy, flexible work schedules, geographic mobility, excellent training, and high income potential.
Careers in insurance and real estate are worthy of consideration because of the variety of positions.
Insurance
The insurance industry has three major areas: (1) life insurance, (2) health insurance, and (3) property and casualty insurance. Most companies specialize in one of these. Insurance companies employ individuals from a variety of backgrounds in a number of areas. However, the positions described here are those unique to the insurance industry itself.
Actuaries: Insurance premiums are calculated by the amount of risk that a particular policy holder represents. Basically, property-casualty actuaries are responsible for analyzing the frequency of catastrophes or chance occurrences such as fires, thefts, sicknesses, and accidents; tabulating the damage they do or the injuries they cause; calculating the mathematical probability or risk associated with recurrences; and then recommending the price or premium that should be charged for insurance against these risks. In the life insurance field, actuaries analyze mortality in order to establish insurance premiums. But that's only part of it! Actuaries in both the property-casualty and life insurance fields play an integral part in determining company policies and practices, assure that the financial reserves of the company are sufficient to pay all claims and expenses, and work with investment analysts to calculate the probabilities of loss. To be a successful actuary requires, among other things, an analytical mind and an ability to apply mathematics to practical problems. Once the premiums are established by the actuary, it is up to the agents and brokers to sell policies.
Agents and Brokers: The work of agents and brokers is selling insurance policies. Insurance sales are
basically a three-step process involving prospecting, interviewing, and providing service. Prospecting includes identifying and soliciting potential buyers of insurance. The successful agent will make roughly forty calls a week and ten selling interviews to make two sales. Interviewing is conducted to determine the financial needs of individual clients or groups. Services provided by agents and brokers include billing clients, issuing policies, detailed record keeping, and response to client questions and needs. This is a crucial aspect of the job because good service leads to more clients.
Agents can work for an insurance company, or they can operate their own independent agencies, selling insurance for one company or a number of different companies. Brokers represent their clients and place insurance policies with the company that offers the best rate and coverage. Often an agent or broker will select a target group such as clients in a certain geographical area, doctors, or college students. Of all life insurance, 42 percent is sold to groups, so group specialists are visible throughout the insurance industry. The group specialist works with business firms, unions, or associations rather than with individual policyholders.
Field Representatives Providing the liaison between the insurance companies and the insurance agents and brokers who sell the companies' policies are the field representatives. These company reps do not sell insurance themselves but rather keep agents and brokers informed of the company's policies and practices and assist them in making sales and servicing customers. The field representative must be poised, diplomatic, and willing to travel, as the position often requires speeches before civic organizations and involvement in public service activities such as fire prevention, traffic control, and safety surveys.
Underwriters: After a policy has been described and offered for sale by the agent or broker, an application for insurance is made by the client. The job of the underwriter is to determine whether the candidate is a good or bad risk. This is done by analyzing information in insurance applications, reports of safety engineers, and actuarial studies. The underwriter in most cases has the final word on whether a policy will be issued. The ability to make personal judgments and the willingness to accept considerable responsibility are essentials of the job. If the underwriter rejects too many risks, the company will lose business to competitors. However, if the underwriter accepts a large number of poor risks, the company may have to pay too many claims.
Underwriters sometimes specialize by the type of risk involved, such as fire, auto, or workers' compensation. Some may handle only business insurance. Usually underwriters work with "packages" that include various types of risks insured under a single policy. No matter how effective an underwriter is in determining which policies should be issued, accidents and catastrophes happen and claims are filed.
Claims Examiners and Adjusters: Both claims examiners and claims adjusters are responsible for determining if a loss is covered by the terms of the insurance policy, if the policy is still in force, if the claim is valid, the value of the loss, and the company's obligation. The claims adjuster uses reports, testimony of witnesses, and physical evidence when investigating a claim. The work involves settling valid claims with speed and efficiency while guarding against inflated and false claims. Adjusters may be called to the site of an accident, fire, or burglary at any hour during the day or night. Some adjusters handle several types of claims, while others specialize in one area such as auto accident claims or claims of business firms.
Claims examiners work in the home office settling small claims and reviewing the work of claims adjusters before final settlement with the claimant is made. The work of the claims examiner involves much correspondence, maintenance of records, and preparation of reports to be submitted to the data processing department. Since examiners may be called upon to testify in court on contested claims, they must be thoroughly knowledgeable about their company's settlement procedures and basic policy provisions. Many claims examiners specialize in life, medical, or disability claims.
Somewhat related to these private industry positions is the civil service position of social security claims adjudicator, who explains to people the government benefits to which they are entitled and how to receive them.
Risk Managers: A loss prevention and insurance specialist usually employed by corporations or firms outside the insurance industry is the risk manager. The risk manager is concerned with such risks as property damage, legal liability for faulty products or injuries, fraud, and business interruption. Major responsibilities include estimating the cost of losses in light of these risks, determining the amount of insurance required to cover these losses, and choosing from which company or companies insurance is to be purchased.
The function of the risk manager is highly sophisticated and requires a thorough knowledge of all kinds of insurance as well as a broad business background with emphasis in finance, accounting, and loss control. Risk managers may be involved in employee benefit programs, pension plans, and workers' compensation programs, thus working closely with the human resources department. In multinational companies, the risk manager must take on the additional responsibility of educating people overseas in loss prevention and must study how workers of different nationalities might react under conditions of potential loss.
Because of the company-wide influence of the risk manager and the required broad educational background, the individual holding this position is an important member of the management team and is involved in major decisions on many complex issues. Most risk managers report directly to a key company executive and may in fact be in line for an executive position.
Real Estate
Real estate has some unique advantages over most careers in business. It is one of the few areas in which you can start your own business with a small financial investment and make a great deal of money, or affiliate with someone else with-out entirely losing your independence and still make a great deal of money. Real estate offers the kind of flexibility that enables individuals to control their own lifestyles-you can work part time or round-the-clock, you can enter a career in real estate at any age, you can earn enough money to retire early or continue to work until well past 65, and you can live in any geographical area of the country and change areas without total career disruption.
The many specialty areas in which people may be employed are described here. Real estate agents include both brokers and salespersons. Brokers, often called realtors, are generally in business for themselves, although a few work for large firms where they specialize in managing or selling a particular type of property. Brokers who manage their own firms may be involved in selling, renting, managing, and appraising properties. They must be aware of economic trends, business trends, zoning and other laws, and loans and financing. Brokers employ salespersons who sell and rent real estate for clients and to clients. Selling real estate involves securing property listings, writing descriptive ads, making preliminary appraisals to determine fair market value and to establish price, writing purchase agreements, obtaining seller acceptances, helping buyers arrange financing, and working with title companies or escrow agencies until transactions are completed. In smaller agencies, the broker is involved in selling. In larger agencies, the broker functions entirely in a management position, hiring and training salespersons and managing office activities.
Residential Brokerage: The largest single field of real estate activity is residential brokerage; that is, helping people buy and sell homes. In smaller communities, most of the homes sold are single-family houses. In urban areas, many clients purchase duplexes, triplexes, and other multifamily dwellings as well as cooperative apartments and condominiums. To succeed as a residential broker or salesperson, one must have a broad knowledge of neighborhoods and the people who live there-access to shopping, schools, and public transportation; tax and utility rates; building and zoning restrictions; and street and highway plans. An ability to work well with people in gaining an understanding of their tastes, lifestyles, and what they are able to afford is essential.
Commercial Brokerage: A commercial broker specializes in income-producing properties, such as apartments, office buildings, retail stores, and warehouses. Since commercial property transactions usually involve large sums of money, a commercial broker often may assist the buyer in arranging financing. Successful commercial brokers can under-stand and explain why properties are good investments in terms of location of property, tax regulations, and advantageous purchasing arrangements.
Industrial Brokerage: Opportunities are big for the industrial broker, who specializes in developing, selling, or leasing properties for industry or manufacturing. Industrial clients will want such information from brokers as availability of transportation, raw materials, water, power, and labor supplies; local building, zoning, and tax laws; and schools, housing, recreational activities, and cultural facilities for their employees. The broker, therefore, must have in-depth knowledge of the community.
Farm and Land Brokerage: The farm broker needs some agricultural training to estimate the income potential of farmland for prospective buyers. A working knowledge of local soils and the crops best suited for them, planting seasons, water supply, draining, erosion, farm market centers, transportation facilities, current farm production costs, and latest developments in agricultural technology is essential. Farm brokers also may be involved in farm management for absentee owners. The sale of rural land for urban expansion is another aspect of the farm and land broker's job.
Real Estate Appraisal: Although some appraising knowledge is needed for any real estate work, the real pros are the real estate appraisers. Appraisers are employed not only by large real estate firms, but also by insurance companies, banks and other lending agencies, government agencies, and tax assessors. Many are self-employed. The work of the appraiser involves gathering and evaluating all facts affecting the value of a property and rendering an opinion of that value-assessed value for tax purposes, investment value, rental value, insured value, and so on. Appraisers usually have backgrounds in real estate plus mathematics, finance, accounting, and economics and are well respected in the real estate field.
There is a demand in the marketplace for non-appraisal analyst services to include such areas as site selection studies, competitive property studies, demand studies for space, real estate market studies, environmental impact studies, and land use analyses. Reports are prepared by real estate analysts who may also, but not necessarily, be appraisers. Analysts are employed by firms in the design and consulting service industries such as architectural, engineering, planning, legal, and real estate counseling firms. Required for entry into this field is a strong background in business, specifically market research, since a major part of the analyst's job is the application of quantitative market research techniques to real estate.
Property Management: The, property manager is often the key to a successful or unsuccessful investment property. Responsible for supervising every aspect of the property's operation, the manager is involved in leasing, rent collection, tenant relations, building maintenance and repair, record keeping, and advertising. Property managers usually work for real estate firms but also may find employment in the real estate departments of banks and trust companies or corporations. Property managers may be self-employed and manage properties for numerous owners. Large apartment complexes hire resident property managers who live on-site. Both commercial and residential properties offer opportunities for professional property managers.
Land Development: Land development is turning raw land into marketable subdivisions, shopping centers, industrial parks, and other residential, commercial, or industrial enterprises. A land developer selects sites, analyzes costs, secures financing, contracts for buildings, supervises construction, and promotes and sells the development to prospective investors. To succeed in this profitable, challenging, and high-risk area requires business experience and some background in engineering, construction, real estate, and finance.
Urban Planning: The urban planner is responsible for proposing productive, economical ways of using land and water resources for urban development and renewal. Working with local governments and civic groups to anticipate a city's future growth is a critical part of this planning. A degree in urban planning is required for this job.
