If you've ever filled out an application for any sort of insurance, you've faced questions that the insurance company uses to determine the level of risk you pose, your premiums and the extent of coverage for which you are eligible. The person who reviews and evaluates your responses is an insurance underwriter. This job requires a thorough, decisive person with excellent analytical skills. If you have a background in finance and an eye for detail, you may want to consider insurance underwriting as a career. Read on as we explore this challenging profession in detail.

A Day In The Life
To "underwrite" means to accept liability for possible losses by clients. As such, underwriters review new or renew applications for insurance coverage, both for individuals and companies. With the help of computer programs, underwriters determine the risk involved in insuring a particular person or company and calculate the appropriate premiums for the amount of coverage requested. These are important decisions, as insurance companies assume billions of dollars of risk each year - if an underwriter is too conservative, an insurance company may lose business. If he or she is too generous, the company may have to pay excessive claims.

Underwriters work for insurance companies and are typically located at the company's headquarters or a regional branch office. Underwriting is typically a desk job with a standard 40-hour work week, although overtime may be required as determined by each underwriting project. Evening and weekend hours are not uncommon.

Working with computers and technology is a vital part of underwriting. Computer software systems are used to analyze and rate insurance applications, make recommendations based on risk and adjust premium rates according to this risk.

Underwriting Opportunities
There are many lines of insurance for underwriters to work in, but the four main categories are:

  1. Life insurance
  2. Health insurance
  3. Mortgage insurance
  4. Property/casualty insurance

Working as an underwriter differs depending on the type of insurance because of the types of clients the underwriter will work with and the risks that are assessed. To learn more about health insurance underwriting see the National Association of Health Underwriters and for information on property/casualty insurance check out Insurance Information Institute.

The Tools Of The Trade
Most employers prefer candidates with a college degree or professional designation and some insurance-related experience. A bachelor's degree in almost any field may be sufficient to qualify a person to begin a career as an underwriter, but employers will probably prefer applicants with completed coursework in business, law and accounting or work experience in the insurance and underwriting field.

The most important underwriting skills are learned on the job. As such, many underwriters begin their careers as trainees or assistant underwriters. During this time, they help collect and evaluate information on clients, but are supervised by an experienced underwriter in the firm. Some large insurance companies offer comprehensive training programs for trainees. These typically include study and the gradual assignment of more complex tasks.

Strong computer skills are essential to a career in underwriting. As such, on-the-job computer training tends to continue through an underwriter's career as the programs that these professionals use are updated.

As with other careers, certifications can improve earning power for insurance underwriters and open up new opportunities for advancement. Underwriters with experience and additional designations may advance to senior underwriter and managerial positions, although some employers require a master's degree to achieve this level.

Field Certification Abbrv. Organization
Life insurance Chartered Life Underwriter CLU The American College
Health insurance Registered Health Underwriter RHU
Personal insurance Associate in Personal Insurance API Insurance Institute of America
Business policies Associate in Commercial Underwriting ACU
Property/casualty Chartered Property and Casualty Insurance Underwriter CDCU American Institute for Chartered Property
Casualty Underwriters

The ACU and API designations both typically take at least a year to complete, while the CPCU designation requires three years of insurance experience and candidates must pass eight exams.
Show Me The Money
Statistics collected by the Bureau of Labor Statistics in 2006 show that the average annual earnings for insurance underwriters is $57,960. (Check out the Bureau of Labor Statistics's most up-to-date wage statistics for insurance underwriters.)

Insurance companies may also provide above-average benefits such as retirement plans and, of course, excellent group life and health insurance. Salary incentives and coverage of the costs of tuition for courses that trainees complete may also be offered.

Finding where you fit in the working world can involve considering a number of variables, but if you're a detail-oriented, analytical person who likes to put the pieces together to solve a problem, insurance underwriting may be a career for you.

Related Articles
  1. Personal Finance

    Insure Your Future with a Career as an Actuary

    If you've got excellent math skills, they can add up to a lucrative career as an actuary.
  2. Insurance

    Can I Get Life Insurance?

    Find out what you can do to get the coverage you need for the right price.
  3. Professionals

    Wanna Be A Bigwig? Try Investment Banking

    A career in this high-stress field can be very rewarding for the right person. Find out if you have what it takes.
  4. Insurance

    How Life Insurance Works in a Divorce

    Learn the implications of life insurance in a divorce situation, and identify the steps you should take to ensure your policies are sorted out post-divorce.
  5. Insurance

    Cashing in Your Life Insurance Policy

    Tough times call for desperate measures, but is raiding your life insurance policy even worth considering?
  6. Insurance

    Avoiding The Modified Endowment Contract Trap

    To avoid MEC status, flexible-premium policies must cap the amount that can be paid into the policy over a period of seven years.
  7. Home & Auto

    Make This The Year You Get Vacation Insurance

    With a few simple policy additions you can protect your holiday plans from being ruined.
  8. FA

    Why the Wealthy Should Buy Lots of Life Insurance

    Wealthy clients have an enviable problem — managing, preserving and growing wealth. Properly structured life insurance can help with these goals.
  9. Insurance

    How To Read a Permanent Life Insurance Illustration

    To help you understand your life insurance policy, companies provide a permanent life insurance illustration. Here is how to read and understand it.
  10. Home & Auto

    How To Choose The Right Bond For You

    Bond investing is a stable and low-risk way to diversify a portfolio. However, knowing which types of bonds are right for you is not always easy.
  1. How do I become an underwriter?

    To become an insurance underwriter, you typically need a bachelor's degree. However, some employers may hire you as an underwriter ... Read Full Answer >>
  2. Do beneficiaries pay taxes on life insurance?

    Generally speaking, when the beneficiary of a life insurance policy receives the death benefit, this money is not counted ... Read Full Answer >>
  3. Can I borrow from my annuity to put a down payment on a house?

    You can borrow from your annuity to put a down payment on a house, but be prepared to pay an assortment of fees and penalties. ... Read Full Answer >>
  4. What are the biggest disadvantages of annuities?

    Annuities can sound enticing when pitched by a salesperson who, not coincidentally, makes huge commissions selling them. ... Read Full Answer >>
  5. What are the risks of annuities in a recession?

    Annuities come in several forms, the two most common being fixed annuities and variable annuities. During a recession, variable ... Read Full Answer >>
  6. How can I determine if a longevity annuity is right for me?

    A longevity annuity may be right for an individual if, based on his current health and a family history of longevity, he ... Read Full Answer >>

You May Also Like

Trading Center