Contemplating a change of career or have suddenly found yourself working in the insurance industry?
For anyone new to the insurance industry and even for those of us who have been it for awhile, it can be a confusing and slightly bewildering scene. Daunting even.
In the following pages you will find information about what insurance is, its history, the different sectors, job roles and players within the insurance industry so as to help you make sense of it all, and where you might fit into it. And where - it's an international industry after all.
So, what is insurance and how does it work?
Insurance is fundamentally a promise. A promise that if someone pays a relatively small amount in advance, they will be covered for a much larger amount if certain events or things happen in the future to them, or something they care about.
That might be an individual person's life, health, house, or car.
Or, in a commercial and business context, their business, property, building, machinery, asset, ship, professional reputation, fleet of vehicles, aircraft, space craft, giant construction project... the list is endless.
At its most basic, the commercial insurance process looks like the diagram on the left.
For present purposes, let us assume that the end consumer (the insured) is a company or some other type of corporate entity, rather than mums and dads buying domestic house or car insurance for themselves.
In a commercial insurance context, the principles are still similar to buying domestic insurance, however the customer usually buys insurance cover from a broker who, in turn, sources the insurance required from an underwriter.
The broker is responsible for making sure the customer gets the best priced insurance and that the insurance covers everything the customer needs insured.
Underwriters price the 'risk' (i.e. decide what they will charge the customer for providing the particular type of insurance required) and decide how far the cover will extend. They do this based on a number of factors including the likelihood and nature of a claim being made by the customer in due course, the customer's own risk management and business practices and so on.
Underwriters usually don't carry all the risk themselves when they issue insurance. They often obtain reinsurance from a reinsurer for a portion of the risk in question. Reinsurers therefore act as the insurers for insurers.
Although the insurance industry mainly revolves around those four main players, this diagram only represents the tip of the iceberg of this vast, global industry. There are far more entities and complexity involved.
We have therefore created a more detailed overview of the insurance industry on the next page to show some of the other areas and how they relate to these core areas.
Click here to view our chart, or watch the video below to find out more about different types of insurance and how it works: