- The insurance industry continues to grow at 7% per annum.
- There is a significant trend towards independent brokerages.
- It is necessary to consider not only the relevant formal requirements but also the informal requirements that must be met in order to be a successful insurance agent.
Insurance offers viable career opportunities for ambitious individuals. The sector continues to grow at an annual rate of roughly 7%, creating more than 50 000 new jobs every year. Independent insurance agents are experiencing the most pronounced growth, due to the trend of insurance companies outsourcing to independent brokers as a means to reduce costs in an increasingly competitive market.
For anyone considering a career in the insurance industry, there is some important information to consider if one is to make well-informed, strategic, and financially beneficial decisions about how to become an insurance agent. Here is a brief guide to get you started in the lead-up to 2022.
2022 Guide for Insurance Agents
Insurance is a potentially lucrative industry to work in, but it is also highly challenging and competitive. It is vital for prospective insurance agents to carefully consider the following variables when planning and making decisions about entering the industry.
Informal requirements
Firstly, there are informal requirements to become an insurance agent. These relate primarily to an individual’s personality, aptitudes, and skills. The traits and abilities that are most conducive to a successful career as an insurance agent include:
- confidence
- tenacity
- resourcefulness
- effective interpersonal communication
It is crucial to consider whether one is suited to being an insurance agent. While the industry is attractive because of its large size, relatively low barriers to entry, and potentially lucrative remuneration, it is also becoming increasingly competitive and challenging in the current economic environment. A crucial fact to confront is that most insurance agents nowadays work on commission, which means:
- income is sporadic, and at times, insecure,
- constant prospecting and cold-calling clients can be tiring and stressful.
The combination of these two realities is largely responsible for the high rate of burnout among insurance agents, many of whom quit in their first year.
Nevertheless, insurance offers viable and lucrative career opportunities for those who enter the industry with a clear understanding of what it really means to be an insurance agent.
Formal Requirements
If you’ve decided you have the traits and abilities to be successful in the insurance industry, the next step is to consider the formal requirements for becoming an insurance agent. The formal requirements differ slightly between each state, but there are some common conditions that pertain in most cases.
To become an insurance agent, one must have a high school diploma. Some companies may also require an undergraduate college degree.
Most importantly for new insurance agents is passing your insurance exam before you can begin practicing legally. The exam itself is a timed and supervised multiple-choice test, and is relatively easy to pass with sufficient preparation.
Many states also require that applicants complete pre-exam training. The length of the training typically ranges from anywhere between 30 and 100 hours, depending on the state, and the particular type of insurance service (e.g. life, medical, or property) that applicants intend to specialize in (these different types are known as ‘lines of authority).
Starting a brokerage?
Once qualified, a pivotal decision is whether to apply for a job at an existing company, or whether to start an independent brokerage firm.
The first option might suit new entrants, as they could gain expertise working with more senior colleagues in an established company. However, as indicated earlier, the industry is moving towards independent insurance brokerages.
It is therefore strategically valuable to familiarize oneself with the process of creating an insurance brokerage. This can be a complex process, and it is advisable to draw on whatever tools are available, in order to empower oneself with the necessary information to know whether one wants to create their own independent brokerage, and if so, how best to do this.
There is a wealth of online resources such as The Really Useful Information Company, which provide guidance and technical information on how to create your own insurance brokerage, and it is highly advisable to make use of these resources in your strategic planning process.
Where to work as an insurance agent?
Careers in insurance differ significantly from state to state. Knowing which states offer the most attractive career opportunities is, therefore, a key strategic consideration. A combination of factors need to be interrogated in this regard:
- remuneration,
- number of jobs,
- the local quotient (relative size of the sector compared with other sectors in a specific state),
- ease or difficulty of getting a license,
- personal needs and preferences (family proximity, lifestyle).
Comparing average incomes for insurance agents across the different states is of course crucial for making smart career decisions. It is, however, not the only factor to consider. The priority should be to find the most advantageous combination of factors that best suits one’s needs and goals.
For instance, while median incomes for insurance agents in New York state are far higher than most other states, the industry size is considered relatively small, and the number of jobs is relatively low. In contrast, the insurance industry in other states such as California and Texas currently has slightly lower median incomes, but many more job opportunities than New York – a vital consideration for new entrants to the sector in 2022
Conclusion
Looking ahead to 2022, the insurance industry is set to maintain consistent growth and continues to offer promising career opportunities for new entrants. Nevertheless, it is vital to make well-informed, strategic decisions from the outset, if one is to make the most of these opportunities.
