eFinancialCareers

Offers stable careers and less competition for jobs.

Insurance is big business. Australian Bankers’ Association figures show the finance and insurance category makes up around 40% of market capitalisation on the Australian Stock Exchange and the industry’s education provider, the Australian and New Zealand Institute of Insurance and Finance, says net premium revenue for 2004-5 topped AU$25 billion with the sector holding “life statutory fund assets of AU$207.7 billion at December 2004, an increase of 9.7% over the previous 12 months’.

Money has cascaded into life insurers because of Australia’s compulsory superannuation regime. Figures from the Australian Government’s financial services information bureau, Axiss, show Australia has the world’s fourth largest pool of funds under management and has assets under management topping AU$1 trillion, having quadrupled since 1991. The industry regulator, the Australian Prudential Regulation Authority, says the sector’s return on equity is at a record high of 23.1%.

The overall industry can be split into three sectors:

1) Insurers – the companies that provide the insurance packages.

2) Reinsurers – companies that insure the insurers.

3) Brokers – companies that sell packages on behalf of insurers. Broking and reinsuring jobs are essential parts of the industry but are overshadowed by life offices with their super funds. Superannuation makes up 90% of all life office assets.
The management of those superannuation funds is building a strong bridge between traditional insurance and banking. “Risk management in the industry is growing strongly,” says Nick Cowdrey, principal consultant, insurance and actuarial at recruiter Carmichael Fisher.

Trends

Despite global catastrophes like the 2001 terrorist attack on the World Trade Center in New York, the Boxing Day tsunami in 2004 and the 2005 Gulf of Mexico hurricanes, which cost insurers about US$100 billion, the industry has remained profitable, although it might have reached its peak. Shane Fitzgerald, senior insurance analyst at JPMorgan and joint author of the 2006 JPMorgan Deloitte report on Australian general insurance, says: “The current levels of profitability are extremely high. Any moderation in profitability that may occur would be coming off a very high base.”

Careers in insurance aren’t viewed with as much enthusiasm they might be. Anthony Breed, manager, workforce policies and strategies, at insurance major QBE says: “Our job-family spread is wide, offering graduates a diversity of roles, but insurance doesn’t have an “employment brand” up there yet. We’re working in this and are about to introduce graduate recruitment programs.’

But Lisa Harrison, manager of home insurance at Suncorp, says: “Gone are the grey cardigans. Insurance is a great starting point for many people. There are so many skills required in the sector, there are lots of different products and the financials that sit behind them, different pricings based on risk, marketing variations and, in Australia, lots of competition, so it prepares people for a very wide rage of career choices.”

Partly because insurers recruit from a wider range of disciplines, the sector does not have trouble filling positions. Where accounting and professional services are unable to fill 23.9% of their positions, job vacancy rates in insurance are a mere 0.6 per cent and graduates with lower academic grades can find openings in the sector.

Key players

Insurers in Australia are traditionally divided into four sectors: non-life (general), life, mortgage and health. The top general insurers include QBE, IAG, Promina, Suncorp and Allianz. Mortgage insurers include the four major local banks, NAB, CBA, Westpac and ANZ. The main health insurers are Medibank, HBF, NIB, HBA and GMHBA. The top reinsurers in Australia as elsewhere are Swiss Re and Munich Re.

Roles and career paths

Apart from the usual operational functions, like human resources, finance, and technology, insurance offers a number of specialist careers. These include:

1) Underwriting: This is the job most typically associated with the insurance industry. Underwriters assess the risk to insurers of providing insurance.

2) Broking: Brokers sell insurance to clients.

3) Actuarial roles: Actuaries analyse the financial consequences of risks the insurance company is taking and ask questions such as whether the company has enough reserves to cover future payouts. The Institute of Actuaries of Australia estimates that the number of qualified actuaries in Australia is around 1000. Of these, about 35% work in life insurance and about 33% in superannuation.

4) Risk assessment: Risk managers work with the insurers’ clients to help make payouts less likely.

In the past, it was common to specialise in one of the above areas, but it’s becoming easier to move between roles. The sector is strong, according to Craig Bennett, director of financial services ratings at Standard & Poor’s, with insurer IAG on AA, the highest rated indigenous company in the Asia Pacific region.

Simon Solomon, managing director of Plan for Life, actuaries and researchers, says employment activity is dynamic, not just for mathematics and finance graduates but for graduates in any field, and employees can move easily between insurance sectors.

Marketing roles dominate in general insurance, says Suncorp’s Lisa Harrison, but there are strong intakes for wealth managers, actuaries, analysts, IT specialists, finance graduates and researchers. Cowdrey at Carmichael Fisher says: “It’s a massive market.”

Pay

Insurance offers respectable rather than glamorous salaries. Hays’ 2006 Banking and Finance survey shows a range of AU$50k for a superannuation administrator to AU$125k for a superannuation fund manager. In retail funds, the starting salary is the same but at the top end would typically go up above AU$165k.

In general insurance, starting salaries are about AU$45-50k but, says QBE’s Breed, top finance graduates entering investment and group finance divisions could have starting salaries of AU$80k. The Institute agrees: “Graduates in law, commerce and finance with a few years’ experience would enter corporate divisions on anything from AU$80k plus.”

Skills

The skills required for working in the insurance industry vary. If you want to work in an actuarial job, for example, you’ll typically need a mathematical or actuarial degree. But if you want to work as an insurance broker, you’ll need to be personable, good at building relationships and able to sell.

• “There are lots of marketing opportunities, which require communication skills, but there are banks of jobs requiring technical qualifications, especially IT, for graduates with strong numeric degrees,” says Lisa Harrison, manager of home insurance at Suncorp.

• “It is vital to have industry-recognized qualifications such as diplomas and certificates in general insurance, insurance broking, risk management, loss adjustment, financial planning, personal injury and workers compensation,” says The Institute’s CEO Fitzpatrick.

• “Our product range is so extensive that we need people from all disciplines, even travel qualifications, though finance, communications, language and commerce are primary,” QBE’s Breed says.