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Studies & Degrees in Insurance

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The world of finance used to be controlled by the merchant bankers. These merchant bankers were usually run by families which spans to different generations. There were even times when Kings and Heads of States would bow down to the Rothschilds, Barings and Warburgs just to have financing during the 18th to the 19th century. However, the emergence of insurance companies have somewhat burst the bubbles of these merchant princes and are now considered the financial powerhouses of high finance. Although some of the old banking families still have presence in the financial world, their clouts are not as powerful as they used to be.

Insurance companies are now the gears that move the machinery called the financial world. It is the insurance companies that are usually now approached first by investment bankers who might want to invest in business undertakings these investment bankers are underwriting because, they, the insurance companies, are awash with so much cash. Usually when there are IPO’s in the market, government bond offerings, companies who want to raise funds through issuance of commercial papers or mutual fund investments, insurance companies are approached first because they are largest single entities that might possibly put up large amounts of money on such financial investments.

Basically, insurance companies have a business model of selling insurance products through issuance of insurance policies that are paid on a monthly, quarterly or annual basis to lessen the effects of financial incapacity of bread winners, theft, loss and exorbitant hospital bills. The insurance industry is divided in four branches namely: life insurance, non-life insurance, car or motor insurance, and medical insurance.

Life insurance usually covers the potential loss of financial capability of an individual. If a policy holder dies or got incapacitated because of an accident or natural causes, the insurance issuer would pay up his beneficiaries the amount set by in the policy. Non-life insurance on the other hand would cover the risk of anything of value from fire, theft or loss. Usually, owners of houses, buildings, jewelries, works of art, and cargoes are those eyed by non-life insurance underwriters as potential clients. Although car or motor insurance would fall under a non-life insurance policy, it is considered a separate industry because it has its own regulating body and it has become too large a business. And lastly, medical insurance, which are now getting popular would cover the risk of an individual against exorbitant costs of being hospitalized.

No matter what type of insurance product an individual may possess, the think-tanks of the insurance companies, which usually are math wizards, have only one thing in mind and that is to determine whether the applicant is risky or not and how risky the applicant is. Usually, risk factors like age, if applicant is a smoker, sex, a car’s year make and model, driving violations, weather conditions, a ship’s captain’s experience and other factors that would determine insurability of a policy whether it’s a life or a non-life policy.

Insurance traditionally is a business dependent on premium payments. However, as insurance companies are getting bigger and bigger, investment banking, loans and venture capitalism are now included in most business models of insurance companies.

Job positions for Insurance:

Insurance Detective

Life insurance companies, having a business model that gives out substantial sum of money to beneficiaries of the insured upon their death have in one form or another been victimized by fraud. Insurance frauds are carried out by scammers by submission of forged death certificates. Forge certificates are submitted for a number of reasons. Death certificates are forged because the death of the insured did not occur in the first place. Death faking is just one way of cashing in on the insurance money and insurance companies know this and that’s why services of Insurance Detectives are actively sought to double check if indeed that the events in question did transpire.

In the car insurance industry, though less amount of money is involved, incidences of fraud are more prevalent. Other insurance companies like fire insurance and theft usually would leave it to police as they are more capable of dealing with criminal activities.

Insurance Detectives are very much like private detectives, meaning they are not connected with the police or any government agencies, except that they investigate only insurance-related cases. Some detectives are directly employed by insurance companies and some are private detectives that are commissioned by insurance companies to investigate a particular case.

Insurance Detectives are called in to investigate a claim, suspect or not, especially when the amount involved is very substantial. For example, a wife of the insured filed a claim on her husband’s insurance policy and the sum involved is around $1,000,000. As an SOP, the insurance company will send an investigator to double check documents presented and confirm if any irregularity did occur or not.

The investigator would then double check all documents presented were in order. To double check the authenticity of the death certificate, the attending coroner would be the best person to ask. Then the identity of the beneficiary should be established next so the money will not be given to the wrong person. Background checking would usually cover employment records and credit records. When everything else that’s needed to be checked is checked, then it is time to submit a written report of all findings and recommendations. The final report should mean the work of the investigator is resolved, that is, if the file is clean and beyond doubt that an irregularity did not take place. However, if the investigator saw that an irregularity is afoot, as he would indicate in his recommendations, then the submission of the final report does not conclude the job. Once an irregularity or fraud has been established, the investigator would have to testify at court hearings how he had uncovered the attempted fraud.

To be an effective Insurance Investigator, of course, knowledge of the appropriate insurance laws and regulations is a must as well as legal procedures like court procedures. Background checking would entail interviewing all sorts of individuals so a bit of some psychology is needed. Great detectives would know how to assess a good character or not. In fraud cases, it is always the little details that give the schemer away. These little inconsistencies would ring alarms and give leads and so the detective should have sharp senses and be a critical thinker.

Those who want to live an exciting life of uncovering frauds and scams, the Insurance Investigator would be the perfect job. To be an Insurance Investigator, sign up for private detective course and then pass the licensure exams and then establish your reputation.

Insurance Actuary

Imagine getting a life insurance policy and that an insurance agent is right now in front of you over a coffee table and words like face value, premiums, double indemnity and other insurance jargons would naturally come up. These terms would be, of course, be explained in layman terms by the agent to his prospective client but what lies beneath those terms are complex mathematical and statistical equations. When an agent quotes a client a premium of $100 monthly for ten years with coverage of $50,000 annually would mean that risk factors like age, smoking habit, family history of diabetes and heart diseases, occupation, and address among other factors that would be a potential risk, would really mean that the risk factors mentioned were expressed in a tangible amount. Although right now, computer software are now being used by insurance companies and that all pertinent details are just inputted, these figures don’t just come out of nowhere but really is a product of complex mathematics and statistical methods before those figures where arrived at. To come up with an exact amount of how much should a client pay would be the responsibility of a company’s actuarial department. Of course,
software have now automated computing risks for insurance companies but still actuaries would always be the backbone of the insurance industry.

Computing risks for insurance companies are just one of the many ways an Actuary’s talent would be of use. Other industries like the automotive industry would find an actuary very useful. There have been times when a car maker would recall certain models of a car because they have found out that certain features might cause a car’s brake system to become ineffective when temperature gets to a certain level, for example. The president of the company would then call up their resident actuary and would ask if paying a class suit would be cheaper than recalling all the cars that have those features in question and repair them. Questions like these are not simple to answer because of so many factors to consider but an Actuary would not even break a sweat answering these types of questions.

Because the insurance industry or in particular an insurance company would be very much exposed to risks, and since they are in the business of minimizing risks, hard to answer questions similar to a car-recall-or- face-lawsuit question would be a regular brain exercise for them whereas other fields or industries would only require them to stretch out once in a while.

Another good example of an Actuary putting his talent to good use would be those launching a marketing campaign. An Actuary would be able to predict sales for the year given how many 30-second spot commercials will be shown in TV for the year.

Accreditation to become an Actuary depends on different countries. In the United States, the Society of Actuaries, for pension, health and life and the Casualty Actuarial Society, for properties, give out exams which is also the same for Australia. In Sweden and Denmark, becoming an Actuary would be enrolling to a four or five-year master's degree. According to a survey conducted by Wall Street Journal in 2009, Actuary was voted as the second best job.