Insurance underwriters are responsible for estimating the risk of loss from policyholders. Based on this analysis, they choose whether or not to offer insurance. If they decide to proceed, they set an appropriate premium and write policies that address the risk.
The insurance underwriter plays a very important role within an organization. The company could suffer financial losses if the underwriter accepts applicants who are too great of a risk and the company ends up paying large amounts of money in claims. However, if the underwriter is too conservative and sets premiums too high, the company may lose customers to competitors with less expensive policies.
To analyze the detailed information in insurance applications, insurance underwriters rely on highly technical software. Supplemental medical reports, actuarial studies and reports from data vendors are also used at times to support the underwriter’s recommendations.
In most organizations, the insurance underwriter serves as the main link between the insurance carrier and the insurance agent. Most underwriters have an area of specialization. The main categories include health insurance, life insurance, mortgage insurance, and property and casualty insurance.
Insurance Underwriters Job Summary
A bachelor’s degree or some insurance-related experience is preferred by most large insurance companies.
As the spread of automated underwriting software increases the speed of work, employment in this field is expected to decline slowly.
Applicants with a background in finance and with very strong computer skills should have the best job opportunities.
Work Environment for Insurance Underwriters
Insurance underwriters commonly sit at their desks for much of the day, working on their computers and using technology to evaluate applications and prepare policies. Most work in company headquarters or regional branch offices, but they may be required to travel at times to attend meetings in other cities. Some underwriters travel frequently to assess risks and to inspect worksites, especially for marine and construction clients. Most underwriters work a 40-hour week, and overtime is rarely required.
The advancement of technology has made insurance underwriters’ jobs much faster and easier. They typically use "smart" systems that accurately and efficiently calculate risks, recommend acceptance or denial of an applicant, and adjust the rate according to the risk.
Education, Training and Licensing
Most large insurance companies look for job candidates with a bachelor’s degree in finance or in business administration for entry-level jobs. However, employers will generally consider degrees in other fields for applicants who have completed business law and accounting courses. Coursework or experience with computers is very helpful, and some employers prefer candidates with several years of related experience in insurance or underwriting.
Beginning as a trainee, entry-level underwriters typically work under an experienced risk analyst to learn how to evaluate routine applications. They study policies and claims to learn about certain types of losses to the company. As they gain experience, trainees are gradually assigned to policy applications with more complexities and greater risk.
Work-study training programs, lasting from a few months to a year, are offered by many larger insurance companies. Continuing education is a requirement for most jobs, since the computer programs that underwriters use are continually being updated.
Candidates hoping to become insurance underwriters must have good judgment for making sound decisions. They must be able to pay attention to detail and have good interpersonal skills. Good communication is needed since the underwriter works closely with other professionals and agents.
There are various certifications that underwriters can pursue, such as the Associate in Commercial Underwriting (ACU) and Associate in Personal Insurance (API) designations offered by the Insurance Institute of America. Experienced underwriters can obtain the Chartered Property and Casualty Underwriter (CPCU) designation from the American Institute for Chartered Property Casualty Underwriters. Other industry certifications are also available.
Employment Figures, Projections, Outlook and Earnings
Insurance underwriters held about 91,720 jobs in May 2014, according to research published by the U.S. Bureau of Labor Statistics (BLS). Around 66% of all underwriters worked for insurance carriers, while the rest typically worked in brokerages and in insurance agencies.
The BLS expects that employment in this field will decline about 6% between 2012 and 2022 due to advances in technology that make this job faster and more efficient, requiring less workers. However, job prospects will remain good as there is often high turnover in this field.
BLS records for May 2014 showed that the median annual wage for insurance underwriters was $64,220. The middle 50% earned between $49,150 and $86,020, while the lowest 10% had incomes in the range of $39,260. The highest 10% had incomes upwards of $113,010 per year.