Industry Report: The Insurance Industry

Black Collegian, Oct 2003 by Patterson, P A

Getting a job hasn't been easy for college graduates for the past two years. However, one bright spot has been the insurance industry, which offers diverse and rewarding opportunities. A lot of people yawn when they think of insurance and think that insurance companies sell insurance and handle claims. Those are important functions in an insurance company, but the industry needs people to handle legal, marketing, investing, operational, and other issues.

Another reason that many opportunities exist in the industry is that some traditional insurance companies are now offering financial-services products, and traditional financial service companies are selling insurance. State Farm Insurance Cos. now sells mutual funds and offers banking services. Citigroup, a large financial services company, now sells life and long-term care insurance through its Citicorp Insurance Agency Inc. subsidiary.

"We always sold life insurance; we had that expertise," said Willie Brown, senior vice president on the Chairman's Council at State Farm. "In the financial services arena, we did not have that experience. We needed people who understood mutual funds and other financial services products." Financial services companies aren't the only source of competition for insurance companies, according to Brown. Retail stores and other companies are also selling insurance and financial products. "Our competition isn't coming from just traditional insurance companies," Brown said. "Our plate is full."

The industry needs fresh, new talent, said Art Albright, Diversity Officer at commercial property and casualty insurance company Zurich North America, who previously worked for Allstate for twenty-two years. When insurance companies used to post jobs, they often required at least three to five years of experience. That meant they often hired someone from another insurance company. The industry is beginning to realize that it needs to grow its own talent, Albright said. "The insurance industry workforce is getting older, especially as it relates to the workforce. A lot of workers are retiring."

That doesn't mean that the industry is boring or that young workers can't make an impact. In fact, younger workers can make a difference in how things are done, said Renee Harper, assistant vice president and assistant controller at Liberty Mutual in Boston. "I wouldn't want people to think this is an older environment," Harper said. "When I interview people I tell them that this is like the Army - you can be all you want to be. You can help shape the direction of the company."

And while there are opportunities, college seniors pursuing jobs in the insurance industry must be aware that even insurance companies are cutting back expenses. State Farm has avoided major layoffs, but it has reduced staff in some areas through attrition, Brown said. The company has also had employees focus more on critical tasks and eliminated less important ones, he said. "We had to learn to do more with less."

In general the employment picture could be better, but it could also be worse. Employers expect to hire 12.7 percent more new college graduates in 2003-2004 than they hired last year, according to a survey conducted by the National Association of Colleges and Employers.

About half of the employers surveyed said that they expect to hire more new college graduates this year than they did last year. Twenty-eight percent said that they plan to cut back and 21.3 percent anticipate no change in hiring levels.

For students who succeed in getting jobs in the insurance industry, salaries can be lucrative, although starting salaries are often not as large as they were a few years ago, according to NACE. Among the business disciplines, for example, accounting graduates, who are often sought-after by insurers, saw their average starting salary offer increase 2.9 percent to $40,647. Marketing graduates saw a one percent increase for an average of $34,038. On the down side, management information systems graduates saw one of the biggest decreases among business majors-their salary offers fell 4.6 percent, to $40,556, NACE said. By comparison, the average salary offer for English majors was $28,786, and for psychology majors it was $27,683, according to NACE.

The top three life and health mutual insurers - companies whose structures make policyholders stakeholders in the company - were New York Life Insurance with $24.7 billion in revenue in 2002, Mass Mutual Life insurance with 20.2 billion in revenue and TIAA-CREF, with $19.8 billion in revenue, according to Fortune Magazine 2003 rankings.

The three biggest publicly traded life and health insurance companies were MetLife, which had $34.1 billion in revenue, Prudential Financial, which had $26.8 billion in revenue and AFLAC, which had $10.3 billion in revenue, according to the magazine.

State Farm Insurance Cos. was the largest property and casualty insurer on Fortune's list with $49.7 billion in revenue. Auto Owners Insurance was second largest with 5.5 billion in revenue, and Sentry Insurance Group was the third largest with $1.8 billion in revenue.