Summary
Insurance underwriters evaluate insurance applications and decide whether to provide insurance, and under what terms.
What they do
Insurance underwriters typically do the following:
- Analyze information stated on insurance applications
- Determine the risk involved in insuring a client
- Screen applicants on the basis of set criteria
- Evaluate recommendations from underwriting software
- Contact field representatives, medical personnel, and others to obtain further information
- Decide whether to offer insurance
- Determine appropriate premiums and amounts of coverage
- Review and update the rules that govern automation software
Underwriters are the main link between an insurance company and an insurance agent. Insurance underwriters use computer software programs to determine whether to approve an applicant. They take specific information about a client and enter it into a program. The program then provides recommendations on coverage and premiums. Underwriters evaluate these recommendations and decide whether to approve or reject the application. If a decision is difficult, they may consult additional sources, such as medical documents and credit scores.
For simple and common types of insurance, such as automobile insurance, underwriters can typically rely on automated recommendations. For more specific and complex insurance types, such as workers’ compensation, underwriters need to rely more on their own analytical insight.
Underwriters analyze the risk factors appearing on an application. For instance, if an applicant reports a previous bankruptcy, the underwriter must determine whether that information is relevant to the policy being applied for. The underwriter would likely consider how far in the past the bankruptcy occurred and how the applicant’s financial situation has changed since the applicant filed for bankruptcy.
Insurance underwriters must achieve a balance between risky and cautious decisions. If underwriters allow too much risk, the insurance company will pay out too many claims. But if they don’t approve enough applications, the company will not make enough money from premiums.
Most insurance underwriters specialize in one of three broad fields: life, health, and property and casualty. Although the job duties in each field are similar, the criteria that underwriters use vary. For example, for someone seeking life insurance, underwriters consider the person’s age and financial history. For someone applying for car insurance (a form of property and casualty insurance), underwriters consider the person’s driving record.
Within the broad field of property and casualty, underwriters may specialize even further into commercial (business) insurance or personal insurance. They may also specialize by the type of policy, such as for automobiles, boats (marine insurance), or homes (homeowners’ insurance).
Work Environment
Underwriters work indoors in offices. Although underwriters spend most of their time working alone on applications at a computer, they sometimes must handle customer inquiries. Some property and casualty underwriters may travel to assess properties in person.
How to become an Insurance Underwriter
Employers prefer to hire candidates who have a bachelor’s degree. However, insurance-related work experience and strong computer skills may be enough for some positions. Certification is generally necessary for advancement to senior underwriter and underwriter manager positions.
Most employers prefer to hire applicants who have a bachelor’s degree. Although a specific major is not required, some coursework in business, finance, economics, and mathematics is helpful.
Beginning underwriters usually work as trainees under the supervision of senior underwriters. Trainees work on basic applications and learn the most common risk factors. Some companies offer training programs that include classroom instruction on the basics of underwriting.
As new underwriters gain experience, they work independently and handle more complex applications.
Employers often expect underwriters to become certified through coursework. These courses are important for keeping current with new insurance policies and for adjusting to new technology and changes in state and federal regulations. Certification is often necessary for advancement to senior underwriter and underwriter management positions. Many certification options are available.
For underwriters with at least 2 years of insurance experience, The Institutes offer the Chartered Property and Casualty Underwriter (CPCU) designation. For beginning underwriters, The Institutes offer a training program.
The Institutes also offer several other designations in insurance specialties, including the Associate in Commercial Underwriting (AU) and Associate in Personal Insurance (API). To earn these designations, underwriters complete a series of courses and exams that generally takes 1 to 2 years.
The National Association of Insurance and Financial Advisors offers the Life Underwriter Training Council Fellow (LUTCF) designation, which consists of a three-part curriculum in basic insurance concepts.
The American College of Financial Services offers the Chartered Life Underwriter (CLU) certification. This certification consists of five core courses and three electives, and candidates must have 3 years of related work experience.
Pay
The median annual wage for insurance underwriters was $70,020 in May 2019. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. The lowest 10 percent earned less than $42,360, and the highest 10 percent earned more than $124,320.
Job Outlook
Employment of insurance underwriters is projected to decline 6 percent from 2019 to 2029. Automated underwriting software allows workers to process applications more quickly than before, reducing the need for as many underwriters. As this technology improves and becomes more widely adopted in the insurance industry, more underwriting decisions will likely be made automatically.
Similar Job Titles
Account Underwriter, Automobile and Property Underwriter, Commercial Lines Underwriter, Health Underwriter, Life Underwriter, Personal Lines Underwriter, Underwriter, Underwriting Consultant, Underwriting Director, Underwriting Manager
Related Occupations
Compensation/Benefits/Job Analysis Specialist, Accountant, Budget Analyst, Credit Analyst, Personal Financial Advisor
More Information
The trade associations listed below represent organizations made up of people (members) who work and promote advancement in the field. Members are very interested in telling others about their work and about careers in those areas. As well, trade associations provide opportunities for organizational networking and learning more about the field’s trends and directions.
- American Council of Life Insurers
- Association of Home Office Underwriters
- Central Illinois Home Office Underwriters Association
- Group Underwriters Association of America
- Life Office Management Association
- National Association of Health Underwriters
- Society of Chartered Property and Casualty Underwriters
Magazines and Publications
Investment Advisor Magazine (digital)
Video Transcript
For every insurance policy written, there is an insurance underwriter behind the scenes… balancing the risk that their company will have to pay out a claim… with deciding how much coverage the company should provide… and at what cost… to earn a profit. Underwriters evaluate insurance applications and determine whether the company should approve an application, or decline to offer an insurance policy when the risk is too high. Most insurance underwriters specialize in one of three areas: life; health; or property and casualty— for a vehicle or dwelling. The work in each field is similar, but the critical information differs— they may consider an applicant’s age and financial history for life insurance, for example, and the driving record and annual mileage for auto. For simple policies, underwriters enter client information into software that provides recommendations; underwriters consider these in their final decision— or may need to gather more information. For more complex types of insurance, underwriters rely on their own research and analytical insight. Insurance underwriters tend to work full time in an office setting, although they may be required to handle customer inquiries or travel to assess properties. While related work experience and computer skills may be enough for some positions, employers tend to prefer candidates with a bachelor’s degree. Starting out, new underwriters work under the supervision of senior underwriters. Gaining certifications through ongoing coursework is expected in many positions, and required for advancement.
Content retrieved from: US Bureau of Labor Statistics-OOH httpss://www.bls.gov/ooh,
CareerOneStop httpss://www.careeronestop.org, O*Net Online httpss://www.onetonline.org