Insurance underwriters evaluate applicants for insurance. They determine whether or not a prospective customer should be insured and, if so, recommend an appropriate premium to take on that level of risk. Insurance underwriters use software to help analyze the risk profile of clients and to calculate costs.
Insurance underwriters work closely with insurance agents who have direct contact with customers and with actuaries who perform complex calculations to determine the likelihood that accidents and other mishaps might befall a category of clients.
Insurance underwriters specialize in many different types of insurance including auto, homeowners, marine, commercial, personal/professional liability, and travel.
Insurance Underwriter Duties & Responsibilities
This career generally requires the ability to perform the following tasks:
- Analyze applicants' data
- Assess applicants' risk
- Operate underwriting software
- Evaluate software-based recommendations
- Research applicants as necessary
- Decide whether or not to offer insurance
- Determine coverage and premiums
Insurance underwriters serve as a go-between for insurance companies providing coverage and the insurance salespeople selling policies. A person seeking coverage typically will apply through a salesperson who refers the application to an underwriter. The underwriter reviews the data associated with the applicant, assesses the risk, determines if coverage should be provided, how much should be provided, and at what cost to the insured.
Many decisions are straightforward and based on preset standards. For example, when a potential customer applies for something common like auto insurance, relevant details such as the driver's personal information, location of residence, driving record, and more are entered into a computer program that will calculate what that individual's rate should be. It's not that the underwriter doesn't need to use analytical skills for such a case, but auto insurance policies are so common there's an abundance of data from which levels of risk can be assessed.
When insurance policies are for something less common or include variables that are less common or less predictable, underwriters need to rely more on their own experience, knowledge, and insight, and less on a computer algorithm. For example, a client might have an art collection or a lot of jewelry that needs to be insured. An underwriter then would need to assess that individual case more closely and cautiously.
Insurance Underwriter Salary
Experienced insurance underwriters can earn well into six figures. Those in specialized fields such as health care, workers compensation, or marine insurance are most likely to have the greatest earning potential.
- Median Annual Salary: $71,790
- Top 10% Annual Salary: $129,550
- Bottom 10% Annual Salary: $43,210
Education, Training, & Certification
A bachelor's degree typically is the only requirement to get a job as an insurance underwriter, but relevant coursework is helpful.
- Education: The best course of studies for insurance underwriters involve business, mathematics, science, accounting, finance, economics, probabilities and statistics, computer technology, and engineering. Any degrees related to those areas will be beneficial.
- Training: Underwriters receive extensive on-the-job training and mentoring if they are hired right out of college. Underwriting trainees typically are paired with seasoned underwriters to learn about policies, procedures, and techniques.
- Certification: Many employers encourage or require the acquisition of certifications in underwriting by taking courses through The Institutes, which specializes in risk management and insurance. Junior underwriters often earn certification as an Associate in Commercial Underwriting or An Associate in Personal Insurance. The courses and exams related to these certifications generally take about 1-2 years. More seasoned underwriters with at least three years of experience often pursue a Chartered Property and Casualty Underwriter certification.
Insurance Underwriter Skills & Competencies
Underwriters need to develop and document analytical, quantitative, decision-making, verbal, writing, and presentation skills in order to be hired and successfully carry out their responsibilities.
- Math skills: An understanding of statistics and probabilities is perhaps the most relevant math skill. Much of the job is determining an appropriate rate for an applicant based on how likely that applicant is to file a claim, based on available data.
- Computer savvy: Much of the statistical analysis is done with computer software specific to the industry. Insurance underwriters need to be adept at operating the software and making sure to input data appropriately.
- Analytical thinking: While some decisions are easy, many situations require insurance underwriters to assess multiple factors related to a particular applicant. Even underwriting software is just a starting point for many decisions; skilled underwriters need to evaluate automated recommendations against their own best judgment.
- Detail-oriented: Each applicant is different, and each data point can impact applications in different ways. It's important for insurance underwriters to be as precise as possible with this information in order to make the best decisions.
According to the U.S. Bureau of Labor Statistics, job opportunities for insurance underwriters are projected to decline 2% during the decade ending in 2030.
This is dramatically worse than the 8% growth projected for all occupations. The projected decline is due to the growing prevalence of automated underwriting software being used to process insurance applications.
Much of the work of insurance underwriters is done sitting at a desk entering data into a computer or analyzing data on a computer. Most of the interactions away from the computer are with insurance agents who rely upon the information provided by underwriters.
Insurance underwriters typically work full-time during standard business hours. Because of the nature of their work, there is little need or reason to have to work evenings or weekends.
How to Get the Job
NUMBERS: The job is largely about working with and analyzing numbers, so enjoying that kind of work is paramount.
EXPERIENCE: A lot of experience is gained on the job, so get a foot in the door and start gaining experience.
CERTIFICATION: Take advantage of opportunities to earn certifications in order to be more marketable.
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