Underwriting your future

Why insurance is proving to be a favoured option for graduates with their heart's set on a 'city' career.

When most people imagine a career in The City they invariably think of investment banks, corporate law firms or management consultancies. Increasingly, however, the insurance industry is becoming a key destination for graduates with an ambition to work in a demanding global business environment. Whereas in the past insurance might have been perceived as a less appealing destination to end up in than the banking sector for example, the expansion of the insurance industry over the past few years has transformed it into a increasingly global industry of which the UK can boast one of the strongest international centres. Whilst the credit crunch has had a negative impact across the financial services sector, the insurance industry is one area which has escaped relatively unscathed and continues to grow its graduate workforce.

China's legacy

The insurance industry has come a long way since its origins in Ancient China. A form of insurance first became popular around 3000 BC amongst Chinese merchants who wanted to ensure that they would see a profit from their goods that they shipped overseas. In the event that a ship went down at sea or ran into pirates, an insuring partner would reimburse the owners of the ship and goods with the value they had lost. To pay for the loss the merchant would be sold into slavery to the insurer until the debt was repaid. This was considered a mutually beneficial arrangement as a merchant could not afford to pay for the lost goods or even to buy a ship unless an outside party invested.

The Chinese had started something. Before long the Greeks, Hindus and Romans also had similar concepts in place, each society modifying the original concept with its own take on the idea. Nowadays, insurance has become one of the largest growth industries in the UK, accounting for over half of the country's invisible earnings (literally, services which are invisible, in contrast to physical goods or manufactured products) over the last five years and employing 250,000 people across the country. Major commercial insurance firms account for the vast majority of this activity and have become major players in European business circles. The industry's £6.4bn of net exports is equivalent to nearly two-thirds of total UK food, beverage and tobacco exports, or almost half of the value of UK oil exports.

Whilst the industry is not immune to the global downturn (witness the near collapse and government intervention into American insurance giant, AIG) it is generally felt that insurers remain well-equipped to deal with the present challenging environment. Since the 2003 stock market collapse, regulatory and capital regimes for insurers have been strengthened. In reference to the struggle faced by other sectors within the financial services industry, Sarah Wilson, the FSA's Insurance Sector Leader, maintained that the insurance industry "is better prepared to deal with stressed market conditions".

Big business

London boasts one of the world's leading international insurance markets and is particularly renowned for its strength in the international reinsurance field - the industry which underwrites the potential losses of insurance companies and allows them to spread the risks they themselves undertake. With greater than ever levels of risk being taken on by financial services firms and corporates, the insurance market has become an ever more vital component of The City, mirroring its growth over the past two decades.

The City's insurance market is dominated by Lloyd's of London, a separate syndicate of 176 insurance firms which provide specialised, high-end insurance products to large corporates and financial services firms. After a troubled time in the early 1990s, Lloyd's (the oldest insurance market in the world, growing out of a coffee shop named after its owner, Edward Lloyd in 1688) has gone from strength to strength in recent years, recording record profits as a collective in 2003. Already one of the world's leading insurance underwriters for natural disasters and human catastrophes, it is also renowned for handling some of the more quirky insurance policies within celebrity circles, including underwriting Keith Richards' fingers and Celine Dion's vocal chords. There are also rumours that Lloyd's are in talks to insure the space flight programme proposed by Virgin Galactic.

Increasingly, however, The City's insurance market has become a global playing field, perusading several of the largest international firms to base their operations in the UK. Global firms such as the German insurance giant and financial services provider, Allianz, might represent an attractive destination for graduates with language skills or with an interest in international opportunities.

Where you fit in

There are various types of positions open to graduates within the insurance industry who typically join the commercial rather than the personal insurance side of the business. Trainee underwriters learn the practise of identifying and calculating the risk of loss from policyholders, learning to establish appropriate premium rates, and write policies that cover these risks. Most large insurance companies look to recruit university graduates who have degrees in areas such as business administration, finance, or related quantitative fields. Increasingly, however, several of the larger firms are offering more general graduate schemes centred around management, sales and marketing, IT, as well as financial management.

Whichever scheme you choose, the training schemes offered by major insurance firms are generally able to rival the variety, training and compensation offered by most banking and finance services employers. For those with a specific interest in finance, financial management schemes are also increasingly offered by insurance firms. These are typically two, or three year schemes which offer a similar level of training and qualifications to the profession services firms. Often this mean studying for a CIMA or ACCA qualification.

With graduate schemes for '09 starts filling up fast, now might be the time to look into insurance industry as an alternative career if you haven't done so already.

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