Before issuing a policy, insurance companies must first determine the level of risk they will assume by insuring a person’s life, health, car or house. They assess risk by asking a series of questions; an insurance underwriter then analyzes the responses. Underwriters help the insurance company decide what coverage to offer and at what price (or premium).
Insurance underwriters usually work for insurance companies. They often specialize in one of three fields: life, health, or property and casualty.
Becoming an insurance underwriter takes a combination of financial knowledge, attention to detail and strong decision-making skills.
The term “underwriting” means accepting liability for possible losses. Underwriters use computer software to assess the risk involved in insuring an individual, property or business. They also calculate the premium needed for the amount of coverage requested.
Because insurance companies take on risks worth billions of dollars, the decisions made by insurance underwriters are vital to their success. They can help bring in business by keeping premiums at a reasonable level, while preventing the payout of excessive claims.
Daily job duties for insurance underwriters may include:
- Analyzing information provided by insurance applicants.
- Determining the risk associated with insuring a person or property.
- Evaluating the recommendations made by underwriting software.
- Inspecting property.
- Deciding whether or not to offer insurance to applicants.
- Calculating premiums and appropriate amounts of coverage.
- Researching additional information, such as medical histories or credit scores.
- Determining the relevancy of risk factors.
Salary Range and Job Outlook for Insurance Underwriters
According to the U.S. Bureau of Labor Statistics (BLS), the median annual salary for insurance underwriters was $62,870 in May 2012. Those in the top 10% earned more than $109,900 annually.
The release of automated underwriting software has reduced the need for underwriters. However, underwriters will still be needed to evaluate the recommendations generated by automated software, and to replace retiring workers.
The BLS also reports job prospects should be best for insurance underwriters with a strong background in finance, and strong computer and communication skills.
Employment prospects and salary ranges typically vary, based on an individual’s work history and educational qualifications, as well as on regional market conditions.
Required Knowledge and Skills
An insurance underwriter job requires the following skills and knowledge:
- The ability to make sound decisions.
- Strong analytical skills.
- Detail-oriented work style.
- Strong computer skills.
- Business knowledge.
- Effective written and verbal communication skills.
- Math skills.
- Interpersonal skills.
This career is a good fit for analytical individuals who enjoy detailed work and excel at solving problems.
Required and Recommended Education for Insurance Underwriters
Most employers hiring insurance underwriters will require at least bachelor’s degree or equivalent work experience. While underwriters may come from a number of backgrounds, it’s a good idea to major or complete coursework in mathematics, business, accounting, finance or law.
Becoming certified can boost your chances of being hired and promoted throughout your career. The Institutes offers the Associate in Personal Insurance (API) and Associate in Commercial Underwriting (ACU) designations, each of which typically takes at least a year to complete.
After three years of work experience, underwriters are eligible to apply for the Chartered Property and Casualty Underwriter (CPCU) designation, also offered by The Institutes. The CPCU designation also requires passing eight examinations.
For newer insurance underwriters, a series of training and certification programs is available through The Institutes or the American College of Financial Services.
Beginning insurance underwriters typically start in entry-level positions, under the supervision of senior underwriters. As they gain work experience, they are often giving more responsibility and the opportunity to work independently. Those who are certified and continue to earn additional designations may advance to senior underwriter and managerial positions – although certain high-level positions require advanced degrees, such as a master’s degree in business or finance.
