Career Path in Insurance: Underwriting, Brokerage, etc

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Anybody here works in commercial insurance (property and casualty, specialty lines, etc) can shed some light on the different career paths?

I am currently on a graduate scheme of one of the largest insurers in the world in a commercial line in the London office. Prior to this I had internships experiences in management and strategy consulting graduating from a top 3 UK university.

I liked my job as a consultant because it was challenging and intellectually stimulating. It had a good combination of hard skills (technical, excel modeling, data analysis, critical thinking) and soft skills (communication skills, leadership skills, client-facing, etc). I am struggling finding a rewarding career here in the insurance industry that combines both of it.

I tend to think that underwriting might be more challenging compared to being a broker (as most of the brokers I've met weren't as smart as the underwriters). However, brokers and people working in sales make insane commissions, some of the best sales guys in my firm made over 100k in a year.

What specialty lines are the most challenging ones? Is it Financial lines (D&O) or is it M&A (W&I)? What about credit risk and political risk?

Any comments or feedback would be very much appreciated!

Comments (4)

 
Oct 26, 2018 - 11:29am

My first point to you is that the insurance industry is quite broad and diverse in terms of opportunities/career paths. What I mean by that is you don't really have that set path like IB > PE after two years. So it's going to be quite difficult to recommend a specific route but I can share my thoughts:

How I view the insurance industry is as following in terms of interesting work (and comp) from highest to lowest:

ILS/Retrocession/Reinsurance > speciality lines > P&C commercial > personal lines

Now despite that, speciality lines can still be a very interesting area to work in as an underwriter or broker, since you're essentially becoming an expert in a very niche type of risk. Hard to say which one is the most challenging since they're all quite different, so it depends more on what you're interested in. I'd also group Marine, Aviation, Energy and even Space business with speciality lines as well. Good thing is you're in London, so you have access to Lloyd's, which is the industry leader in speciality lines, a lot of interesting stuff gets insured there.

In terms of underwriting vs brokerage, both have equally as smart people so lose that stereotype but I will say its essential for brokers to have strong client relationship skills. Although underwriting will provide you a stronger understanding of the nature of the risk, being a broker is much more of a commercial role, you need to understand the risk, but also have to keep tabs on market conditions, major loss occurrences and provide that intel to your client. So I think there's fulfilling work in both routes, comp will follow if you do well.

You should also consider looking into reinsurance and retrocession, where the work (in my opinion) is the most interesting and rewarding since you're essentially looking at entire insurance portfolios instead of individual risks. Its much more about capital management and earnings protection rather than pure risk hedging.

"A guy gets on the MTA here in L.A. and dies. Think anybody'll notice?" - Vincent
 
Oct 26, 2018 - 5:38pm

Hi there,

Thanks for chiming in!

"How I view the insurance industry is as following in terms of interesting work (and comp) from highest to lowest:

ILS/Retrocession/Reinsurance > speciality lines > P&C commercial > personal lines"

I absolutely agree with this. Before getting here I actually wasn't sure about the diverse range of career paths available, some people pursue a career in claims, actuary and it is less "structured" and more flexible compared to consulting. For instance, I've come across people who have literally experienced all parts of the business before settling into sales.

I know what ILS is but how different is that compared to capital markets or ECM? I haven't heard about retrocession but reinsurance is certainly another field I would be interested. Would it behave in the same way as you would do if you were a specialty line underwriter in terms of the job or do you require any other specific skills?

How would you move into reinsurance? Most big Reinsurers like Swiss RE or Munich RE dont seem to take grad as reinsurance underwriter, so I guess you most likely train as a primary insurance underwriter and then you do a lateral move to become a reinsurance underwriter?

As you can see I am fairly open to any career path. The fact that I am not particularly inclined to being a broker is because as you just said, very much commercial driven and I've seen so many brokers literally doing nothing that just makes me questions what are the minimum requirements to become broker (you wouldn't be surprised of the amount of people who work as a broker/sales and don't even have a uni degree, which again, that's fine as they are qualified to do their job but in my opinion they didn't impress me nor came across as someone smart).

For clarification, I am in the line of trade credit and political risk which I guess it can be considered a specialty line and not a general "commercial" line.

 
Oct 31, 2018 - 6:24am

Exactly, I think it's still early on so take any opportunities to explore different areas of the industry.

Regarding ILS, it essentially is a capital markets function. Whereas ECM is focused on raising funds in form of equity, ILS raises funds by securitizing insurance risk into a quasi-debt like instrument. So work wise, it's a mix of structured finance, where you develop the product to fit a client's insurance needs and capital markets, where you act as a bookrunner/distribution for the deal.

Retrocession is simply reinsurance for reinsurers, so the work is very similar between the two. Whereas, being on the speciality lines will make you an expert of the nature of a specific risk, reinsurance (treaty and retrocession) requires a better understanding of how insurance companies manage risk and structure their reinsurance buying. So I'd say broader commercial awareness, in addition to understanding capital structures, is required for reinsurance. I will mention however there's also reinsurance for speciality lines which will still require strong knowledge of the risk.

Sadly, given cost pressures and low profitability, reinsurers aren't hiring that actively but people do transition over after a few years on the primary side. This is where I would say networking helps.

"A guy gets on the MTA here in L.A. and dies. Think anybody'll notice?" - Vincent
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