Insurance is one of the UK's most important service industries and as such it has achieved a pre-eminent position in the world's market. The UK has the largest insurance industry in Europe and the third largest in the world and generates almost a quarter of total EU premium income. An insurance and actuarial graduate career is traditionally viewed as being a rather staid profession, so you might be surprised at the number of interesting roles available in the industry.
Within the industry there are five main business sectors: pensions, insurance, life assurance, investment and actuarial work. Whichever are you choose, you will be entering one the UK's largest industries. Over 334,000 people are employed in the insurance sector, either in companies of which there are several hundred, or insurance broking, which arranges cover with the insurance companies.
In simple terms, insurance operates by a large group of people paying fixed amounts of money, known as premiums into a fund. Providing a claim is legitimate, money is then taken from these funds when compensation for a loss or accident is required. Therefore insurance products protect individuals and institutions in the event of these circumstances.
There are seven main areas of insurance:
There are many different areas of specialism in the insurance world but all fall within two principle business factors: life and general insurance. Life is concerned with insuring people against premature death or permanent injury, also providing for the financial needs of individuals through savings and in retirement. Pensions and long term investments contracts fall within the life category. General insurance provides protection against damage to property, personal injury and liabilities - everything from motor and household insurance to risk protection for high cost installations such as oil risks or satellites.
A third major facet of the industry is reinsurance, whereby insurers spread their risk by taking on their own insurance against claims. This spreading of risks accounts for a large proportion of the business which comes into the UK every year and represents a growing area of insurance activity.
The establishment of the single European markets means that UK insurers have to cope with new business conditions, to ensure that they increase their share of the European business and respond effectively to the increased competition from overseas insurers within the UK.
In recent years there has been a large expansion in the services provided by insurance companies. The majority of the larger insurers now offer services ranging from unit trusts to mortgages, and this is a direct result of the increasing diversification of all the major institutions within the financial world. Insurance companies, building societies and banks increasingly find themselves battling for the same financial services markets. Coupled with the increasing globalisation of the insurance market, there has been a marked trend in recent years towards the merging of rival companies in order to survive.
Average Insurance and Actuarial Graduate Salary
Insurance and Actuarial Graduate Career Path
Insurance services cover a broad number of roles across the whole process of the insurance life cycle from selling policies, administering insurance claims, analysing and calculating risks, setting premiums, fund management and processing claims.
The merging and diversification of the insurance industry, along with advances in new technology, is good news for graduates. Insurance companies require more graduates than ever before and are able to offer a great variety of positions. New trainees may be employed in one of the main areas of insurance, or in sectors such as information technology and finance. Most positions allow employees to follow professional insurance exams leading to associate membership of the Chartered Insurance Institute (CII).
Generally speaking it is the very large organisations that dominate the insurance markets although there are the smaller actuarial consultancies or insurance brokers that can offer graduate careers. Many different financial services providers, such as banks and retail organisations sell insurance. These brokers are intermediaries who go to an insurance marker on your behalf to negotiate the level of cover you require. The market provides an arena for the broker to negotiate the best deal with an insurance company. However, particularly in personal insurance, customers can also deal with insurance companies direct without using an intermediary.
Life assurance companies provide a variety of savings and protection services to policyholders. They are very different from general insurance companies that sell insurance policies for your car, for example. Rather than selling short-term policies that tend to be renewed every year, life assurance companies sell long-term policies.
Sales are obviously the front end of insurance, dealing with the public usually face-to-face and advising them on the right insurance policy for them. There are also insurance organisations that specialise in providing insurance for companies and these organisations also offer sales positions for graduate entrants. Actuarial positions involve the calculation of the risk the organisation undertakes for the return on investment. This usually involves the use of statistical models to predict risk. Fund management is also the calculation of risk the organisation undertakes for the return on investment. However, less complex mathematical equations are used in actuarial work but more emphasis is placed on the subjective interpretation of data.
All the different graduate entry positions in insurance are generally segregated from each other. This means that you generally can't move within a company from one role to another, i.e. sales to actuary. As a result, each type of graduate entry position will lead to different career paths within an organisation.
A typical insurance and actuarial graduate career can be divided into two main categories:
- Underwriting - analysing risks and setting premiums
- Claims - answering queries and administering claims from call centres
- Insurance broking - analysing your needs and negotiating the best deal with insurance companies
- Actuarial - the number crunching side of the business
- Accounting - ensuring the numbers add up and liabilities are met
- Marketing - consumers increasingly demand individually tailored products and individual marketing strategies are crucial to ongoing success.
- Sales - these roles will generally lead to sales management or other commercially orientated roles. Although, the skills gained in these roles can be transferable to areas such as independent financial advising. Salaries in these types of roles generally have a below average basic but with on target earnings (OTE) the salaries are on the whole marginally higher than average graduate salaries. Sales managers and sales directors generally earn very high salaries if the company is achieving its financial targets.
Other support functions include IT, human resources and facilities management.
An actuary is someone who has a thorough grounding in economics statistics and the mathematics of finance, and who uses these skills and knowledge to develop strategies to solve financial problems. In practice, the maths and stats just form a base from which an actuary will work. Other skills will be important: knowledge of relevant legislation, business practices, marketing and accounting will all be used by actuaries in their day-to-day work.
Although there is a wide variety in the work of different actuaries, there is a common theme. For most actuaries the role involves making financial sense of the future. This involves:
- analysing the past;
- modelling the future;
- assessing the risk forward;
- communicating what the results mean in financial terms.
The actuary's skills in finance and risk management are used extensively in the insurance, pensions and investment industries, and any other business managing long-term financial products. Actuarial risk assessment skills are also increasingly used in non-traditional areas, such as health insurance and risk analysis of engineering projects. This trend has been accelerated by the development of advanced IT systems which have automated much of the traditional financial modelling work.
In terms of career paths there is just as much variation, and there is no standard path that each new entrant will follow. It is down to each individual to determine the direction of their own career as they see fit.
Generally actuaries start working for either a traditional life (insurance, assurance, pension offices) or a consultancy companies. The main difference between these two options is that joining a life office you will be working for one internal client, the company, whilst at a consultancy it is likely that you will be working for more than one external client at a time.
Actuarial consultancies are probably the biggest employers of actuarial graduates in the UK. Many actuarial consultancies offer advice to employers and trustees who run occupational pension schemes. The advice to clients will cover a wide range of topics from setting up of a new scheme to assessing the level of contribution to be paid by the members and valuing the fund if the company is to be taken over.
Additionally, consultancies will offer a whole range of services to their clients, such as acquisitions, mergers, corporate recovery and financing capital projects. Because of their knowledge of the finance industry and their technical skills, actuaries work alongside other business professionals in consultancy firms.
In life assurance, actuaries are involved at all stages of product development and the pricing, risk assessment and marketing of the products. In addition, actuaries fill key roles in financial management and the investment of policyholders' money: developing strategies that ensure customers get a good return.
General insurance is a fast growing area of employment for actuaries. Actuarial and statistical techniques are used extensively in the analysis of often substantial amounts of data. Increasingly, actuaries are being asked to provide formal opinions on the technical provisions for general insurance companies.
Other areas graduates actuaries can find roles in include:
- Investment management;
- Corporate finance;
- Legal services
The variety and choice of rewarding opportunities available means that it's a stable profession with very low unemployment.
New trainee graduate actuaries will generally be placed within teams, supporting all members of the team from more senior actuarial students to scheme actuaries. In a typical day a graduate will carry out a variety of tasks, from calculations to preparing papers for client meetings. The nature of consulting work can make it necessary to work longer hours on occasion to meet important client deadlines, so a flexible attitude is vital. As your knowledge and skills develop, you will become more involved in dealing directly with clients, giving them the information and advice they require. It is necessary to be motivated enough to study for the actuarial exams whilst working. This can involve studying in the evenings and at weekends, especially around exam time. Within larger organisations there are opportunities to guide the direction in which your career develops, so you can tend more towards the calculation side or the consultancy side of the job.
Graduates becoming actuaries will expect to become fully qualified, which will take between five or six years, before becoming a senior actuary. A trainee actuary will usually earn above the average graduate starting salaries which will substantially increase once qualified. Actuaries have recently been able to contract out the skills and as a result they are able to become very high earners. Within fund management graduates are expected to take on an administrative or research role before working towards the role of fund management and actually making investment decisions. Successful fund managers can earn some of the highest salaries in the industry.
Qualifications and Skills Needed
What proportion of candidates as a percent we place into Insurance and Actuarial graduate careers and the typical qualities graduate employers look for.
GRB Placements for Insurance and Actuarial by Degree
Typical Candidate Attributes
Insurance is a multidisciplinary profession, calling for graduates with all kinds of talents, skills and knowledge. Communication skills, intellectual breadth and the ability to make quick decisions are paramount.
The type of degree needed to go into insurance is not important however, graduates need to show excellent commercial awareness skills. Certain subjects such as economics, law, mathematics, statistics, business studies and languages can be particularly useful.
Most entrants to the actuarial profession possess a degree. The profession welcomes graduates from an discipline provided the minimum entrance requirements are met, but most employers look for applicants with need a strong numerate degree (actuarial science, mathematics, economics and statistics degrees are common) with an emphasis on statistics. Strong A levels, including mathematics is paramount. Fund management applicants will generally need a numerical or science discipline with very high A-level qualifications as well as strong commercial skills.
In order to become a fully qualified actuary, a Fellow of the Faculty or Institute (FFA, FIA) you must pass all of the professional examinations and complete three years practical work experience, within an actuarial field (Institute only). It is more usual for employers to sponsor students through their professional examinations as opposed to undergraduate or postgraduate study.
Work experience can prove to be a real asset when job hunting and indeed is now often used as part of the recruitment process.
If you have a driven and dynamic personality combined with a forward-thinking approach and an analytical mind then working in insurance or the actuarial sector could be for you. Although there are a wide variety of jobs in this area requiring different skills you will be assessed on your ability to prioritise workloads, work in a team, and show good time management and effective communication skills.
Once you are settled with your role you will find that the training and development opportunities are excellent. Most employers in this sector are large and training is well resourced. You're likely to get the chance to study for a range of professional qualifications - many of which are recognised around the world. That said, qualification won't be easy with commitments ranging from a few months to several years. You'll need to be highly motivated and organised. You will be required to keep your technical knowledge up-to-date, write papers for your professional institution and attend refresher courses about regulations governing the industry.
Sources for Further Information
Faculty of Actuaries and Institute of Actuaries www.actuaries.org.uk
Chartered Insurance Institute www.cii.co.uk
The Association of British Insurers www.abi.org.uk
International Underwriting Association www.iua.co.uk
British Insurance Brokers' Association www.biba.org.uk
Luke, University Of Coventry
"What have I learnt in my first graduate job that I did not at university? In lectures, they do not teach office politics, tea-making etiquette, or ways of dealing with unruly managers! The quirks of office life aside, my first graduate job has been a real learning curve.
Not only has it been my first degree-related regular employment, but also the first time I have ever sat behind a desk and worked in an office. I arrived at university for a Disaster Risk management degree, with a culinary background, having worked as a Head Chef before, during, and after my university career. Unsurprisingly, my first graduate job was daunting. From application, to interview and enrolment, it was fantastical, exciting and scary.
To compound these emotions, within one month of joining, my manager left for a 9-month maternity break and I was now in charge of our Corporate Risk Management department. Taking the reins has been a rollercoaster ride. I have realised the chasm that is the knowledge gap between those theoretical processes learnt in lectures and the day-to-day reality of running a department.
These things you have to learn on your own, but I have thoroughly enjoyed it. Moreover, the extra responsibility dropped in my lap, encouraged and demanded that I raise my game to meet the challenge.
A graduate job is a great thing. It is a remarkable journey and what I have learnt from colleagues, training and simply watching the giant machine work, will be invaluable to my future career."