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 an individual who is thorough and decisive, 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.
- Insurance underwriters determine risk, premiums, and the extent of coverage for insured parties.
- Most companies require insurance underwriters to have an undergraduate degree, some experience in the insurance industry, and may even need underwriters to be certified.
- Working with computers and technology is a vital part of the underwriting industry.
- The four main career paths for insurance underwriters include life insurance, health insurance, mortgage insurance, and property/casualty insurance.
- In addition to their salaries, underwriters can expect to receive other benefits, retirement options, and great insurance coverage.
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Insurance Underwriters Education and Skills
Most employers prefer candidates with a college degree in business or another related field, such as finance, economics, or accounting. These degrees allow students to complete coursework in business, law, and accounting.
While a bachelor's degree in almost any field may be sufficient to qualify a person to begin a career as an underwriter, it's also a good idea for candidates to also have some insurance-related experience.
As with other careers, certifications can improve earning power for insurance underwriters and open up new opportunities for advancement. These special designations require candidates to study and pass exams before they can be certified. Becoming certified and maintaining these credentials through recertification allows underwriters to stay on top of insurance trends and regulations.
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.
The AU 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.
|Certifications for Insurance Underwriters|
|Life Insurance||Chartered Life Underwriter (CLU)||The American College|
|Health Insurance||Registered Health Underwriter (RHU)||The American College|
|Personal Insurance||Associate in Personal Insurance (API)||Insurance Institute of America|
|Business Policies||Associate in Commercial Underwriting (AU)||Insurance Institute of America|
|Property/Casualty||Chartered Property/Casualty Underwriter (CPCU)||American Institute for Chartered Property/Casualty Underwriters|
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 about clients but are supervised by an experienced underwriter in the firm. Some large insurance companies offer their own comprehensive training programs, which typically include both study and the gradual assignment of more complex tasks.
Strong computer skills are essential to a career in underwriting. So, on-the-job computer training tends to continue throughout an underwriter's career as the programs that these professionals use are updated.
Insurance Underwriter Job Duties
To underwrite means to accept liability for clients' potential losses. As such, underwriters review new applications or renew existing ones for insurance coverage for both 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 they are too generous, the company may need to pay excessive claims.
Underwriters work for insurance companies and generally work at corporate headquarters or a regional branch office. Underwriting is typically a desk job with a standard 40-hour workweek, 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.
Insurance Underwriters Job Opportunities
There are many lines of work for insurance underwriters. But there are generally four main career paths that these professionals can follow:
- Life insurance
- Health insurance
- Mortgage insurance
- Property/casualty insurance
The duties of an underwriter tend to differ with each type of insurance involved. This means that the duties of an underwriter for a life insurance policy are different than those of a home insurance policy underwriter. That's because both types of clients will vary as well as the risk.
Insurance underwriter salaries may be impacted by a number of factors, including the person's education, experience, certifications, designations, the type of underwriting industry, and the company for which an individual works.
Salary Expectations for Insurance Underwriters
The median annual salary for insurance underwriters was $76,390 in May 2021, according to the Bureau of Labor Statistics (BLS). The highest 10% earned as much as $126,380 while the lowest 10% in the field earned a maximum of $47,330.
The BLS categorizes the median annual salary based on the top industries for insurance underwriters:
- Credit Intermediation: $78,060
- Direct Health and Medical Insurance: $77,290
- Insurance Agencies/Brokerages: $76,450
- Direct Insurance (except life, health, and medical): $76,040
- Other Insurance Activities: $62,320
Insurance companies may also provide above-average benefits such as retirement plans and, of course, excellent group life and health insurance. They also may offer salary incentives and tuition reimbursement.
The Bottom Line
Finding where you fit in the working world is often not a linear path; it is quite normal to try out a number of potential career opportunities. But if you're a detail-oriented, analytical person who likes to put the pieces together to solve a problem, then insurance underwriting could be a good career fit for you.
U.S. Bureau of Labor Statistics. "Occupational Outlook Handbook: How to Become an Insurance Underwriter."
Maryville University. "How to Become an Insurance Underwriter."
U.S. Bureau of Labor Statistics. "Occupational Outlook Handbook: What Insurance Underwriters Do."
U.S. Bureau of Labor Statistics. "Occupational Outlook Handbook: Insurance Underwriters, Pay."