The credit and political risks sector is seen by many as one of the more exciting and glamorous areas of insurance. But what skills are essential to be a success? Kristina Lushey goes behind the scenes
The credit and political risks market, although continually expanding and changing, is still shrouded in mystery for many recruiters in the insurance industry. The political risks industry, in particular, is extremely close-knit - often recruiting via word of mouth, or by market reputation.
A political risk does not, of course, relate to Tony Blair's spin regarding weapons of mass destruction, nor does it equate to the popularity of the Tory Party. It is, in its most simplified form, a contract being frustrated or cancelled due to: political actions over which companies have no control; a breach of contract by a public buyer, non-payment of contracts and the inconvertibility or non-transfer of currency; non-payment for exported goods, confiscation or seizure of assets; unfair calling of bonds; and embargo or license import/export cancellation.
It is one of the more exciting classes of insurance, as the risks, by their very nature, are cross-border and language skills can be extremely useful. The London market is a vital centre for political risks business, but that also means there are few regional opportunities. Having said that, Marsh - a Lloyd's broker dealing in the credit market - has regional offices in Birmingham, Cardiff, Glasgow, Leeds and Manchester.
Only high achievers are suitable for graduate trainee positions. They should have a 2:1 degree in subjects such as international business or economics, an extremely good set of GCSEs and A Levels, and be articulate, with an outgoing personality.
A trainee political risks broker will form an understanding of contract and insurance law. However, they must have good numerical skills, geography and world history knowledge, as well as familiarity with countries and their religions. Political awareness - particularly of any conflicts - is vital. Trainees will learn about the banking market - how deals are structured and debt instruments - simultaneously building up knowledge of the biggest exporters and traders worldwide.
Essential soft skills include good negotiation talents, with an ability to make judgement calls in tense situations, which can arise when broking.
The ability to multi-task is also crucial. For example, an underwriter may ask about a variety of cases, not just the one being presented.
Third on the list is a good memory, as there may well be questions relating to an event that took place months ago. And brokers must also have a likeable, flexible personality; there are a great number of characters in the market place and underwriters have a short attention span, so maintaining their interest can be quite a task. A self-possessed, confident personality, not easily phased is ideal.
A trainee underwriter will have a similar educational background, but with stronger analytical skills. They must have the ability to assimilate information quickly, and react well under pressure. They must not make snap judgements, nor be influenced by a broker's slick presentation, but get to the heart of the risk.
Salaries within the political risks arena are similar to other classes with graduates commanding around £22,000. Once a broker has gained in experience and confidence, salaries can increase quite rapidly, perhaps to £30,000-£35,000. Those with four to five years' experience under their belt, that have demonstrated themselves as good business producers, can earn serious money - in the region of £75,000 and more.
With regards to Lloyd's syndicates, it is a similar story. But equally, as a syndicate's 'star' begins to shine and is given underwriting authority, salaries can increase quickly, perhaps to £40,000 after five years' experience.
For senior underwriters, the sky is the limit.
Credit insurance does not refer to cover against the huge amounts of money we place on our credit cards each month, but is a product that protects a company's balance sheet from the effects of a default in payment by a private buyer.
Opportunities to get a foothold within the credit insurance market are greater, as it is less of a closed shop. Graduates with a numerate degree and strong analytical skills will do well, and credit insurers look to candidates that perhaps may have banking experience, or have considered accountancy as an alternative career. Starting salaries can be a little bit less than those in the political risks market, starting off at perhaps £18,000 and they may lag behind in relation to their political risk counterparts.
Possibilities exist for candidates from general insurance to join this industry, but, on the whole, it is rare. There is, however, plenty of cross-fertilisation between the credit and political risks markets, as brokers become underwriters, or indeed underwriters move over to broking.
Political risks is seen as the more glamorous option as they deal with larger risks, commanding bigger premiums.
Candidates that will do the best in today's market will be those that manage to build their reputation quickly within the market place as an aspiring underwriter or broker. This market remains very much a community, and reputation will go a long way to further those career aspirations.
Adam Massingham, political risks director at Tysers International Insurance & Reinsurance Brokers, sums up typical expectations, with his company's current recruitment needs. "We would like to add to our team, but it is vital that we find a 'quality' candidate. They need aggressive broking skills, analytical skills, and the ability to bridge the language barrier between the financial markets and the insurance industry. They must also be a rapport-builder with clients and underwriters alike, able to produce business, but ideally bringing business with them."
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