How to Become an Underwriter

An underwriter is responsible for evaluating and assessing whether a financial risk is worth taking. The assessment is conducted for a fee, typically in the form of a commission, premium, spread, or interest.

Underwriters perform different functions depending on the context. Underwriters in the financial world help investors determine if a risk is worth taking or help a company launching an initial public offering (IPO). There are underwriters when you apply for a personal loan, a health insurance policy, or a mortgage.

To become an insurance underwriter, you typically need a bachelor's degree. However, some employers may hire you as an underwriter without a degree if you have relevant work experience and computer proficiency. To become a senior underwriter or underwriter manager, you need to obtain certification.

Key Takeaways

  • An underwriter assesses and takes on another party's risk in sectors such as debt and equity markets, mortgages, and insurance.
  • To become an underwriter, a bachelor's degree that includes coursework in economics, business, accounting, finance, or mathematics is ideal.
  • New hires get on-the-job training from senior underwriters, but to advance an underwriter must complete key certification programs.

Insurance Underwriter

Insurance underwriters are responsible for reviewing applications for coverage and for making the decision to accept or reject an applicant through the use of risk analysis. Insurance brokers and other entities submit insurance applications for their clients, and insurance underwriters look over the application and make a decision on whether coverage will be offered or not.

Insurance underwriters also advise on risk management issues, make decisions about coverage for individuals, and decide if existing clients should continue receiving coverage, and at the same level.

Education Needed to Be an Underwriter

You don't need a specific bachelor’s degree to become an underwriter, but courses in mathematics, business, economics, and finance are beneficial in this field. A good underwriter is also detail-oriented and has excellent skills in math, communication, problem-solving, and decision making.

Once hired, you typically train on the job while supervised by senior underwriters. As a trainee, you learn about common risk factors and basic applications used in underwriting. As you become more experienced, you can begin to work independently and take on more responsibility.

Fast Fact

The median annual salary for insurance underwriters, as of May 2020, according to the U.S. Bureau of Labor Statistics, was $71,790; the top 10% of insurance underwriters earn over $129,550.

Your employer may require you to get certified as part of your training or to advance to a senior underwriter position. Completing certification courses helps you stay current on insurance policies, technologies, and state and federal insurance regulations.

Underwriting Training Offered

The American Institute for Chartered Property Casualty Underwriters offers training programs for beginning underwriters. The associate in personal insurance takes 12-18 months to complete. The associate in commercial underwriting takes 9-15 months to finish.

The American College of Financial Services also offers certification options for underwriters, the chartered life underwriter designation.

Article Sources

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  1. U.S. Bureau of Labor Statistics. "Insurance Underwriters - Pay." Accessed April 16, 2021.

  2. American Institute for Chartered Property Casualty Underwriters. "Associate in Personal Insurance (API)." Accessed April 16, 2021.

  3. American Institute for Chartered Property Casualty Underwriters. "Associate in Commercial Underwriting (AU)." Accessed April 16, 2021.

  4. American College of Financial Services. "Chartered Life Underwriter." Accessed April 16, 2021.