How to be an Underwriter?

There are plenty of fields you can choose in the world of insurance. One of them is a career in underwriting. Here is all you need to know about underwriting.

What Does an Underwriter Do?

An underwriter is essentially responsible for evaluating whether a financial risk is worth taking. This assessment is usually conducted for a fee in the form of a commission, premium, spread or interest.

Underwriters often perform many functions according to the context they are working in. There are underwriters in the financial world that help investors determine whether a risk is worth taking or not. Underwriters also help companies launch an initial public offering (IPO). Underwriters can also be found in other fields like personal loan underwriters, health insurance underwriters and mortgage underwriters. The most popular fields for underwriters are insurance and mortgage as the most frequently asked questions are “how to be an insurance underwriter?” and “how to be a mortgage underwriter?”

Job Prospects for Underwriters

Underwriters are usually employed by insurance companies or independent insurance brokerage firms. Underwriters usually fill a back-office role in support of insurance sales agents. However, they also often accompany agents on sales calls with permanent or prospective clients. Underwriting jobs are usually posted directly on the company’s websites. Moreover, underwriting positions can also be found on various job websites such as CareerBuilder, Indeed and Glassdoor.

Education for Underwriters

A bachelor’s degree is required to become an insurance underwriter. However, some employers choose to hire individuals who have relevant experience in the field and computer proficiency even if they do not have a bachelor’s degree. To learn how to be an effective underwriter, you should be detail oriented and have excellent skills in math, problem-solving, decision making and communication.

If you have any coursework or experience in business, accounting or finance, that would be a plus point although it is not required. There is an importance of a high degree of computer literacy as underwriters often have to perform tasks related to data analysis which is typically computerized. However, some firms also stress on the importance of having a Master of Business Administration for all the candidates who want to apply for an underwriting position.

Navigating Career Paths and Certifications in Underwriting

There are some entry level or beginner level jobs in the underwriting field and some expert level. Entry level jobs do not necessarily require any special training or certification. However, for expert level underwriting jobs or to even advance in the career of underwriting from a beginner level job, it is important to have some sort of formal certification. This completing of certification can help you stay relevant on insurance policies, technologies and state and federal insurance regulations. The leaders in the field of underwriting are from the Insurance Institute of America (IIA) and the American Institute for Chartered Property Casualty Underwriters (AICPCU).

The AICPCU offers many training programs for beginning underwriters. You can also take two special certifications: associate in personal insurance and associate in commercial underwriting. Both of these certifications usually require two years of coursework which also includes exams that you have to complete.

The most respected credential these institutes offer is Chartered Property and Casualty Underwriter (CPCU). This credential has eleven courses out of which you are required to pass eight. Along with this, you are also required to obtain at least three years of relevant insurance industry experience. You can pursue a career in either commercial or personal insurance with the CPCU.

Once you are hired, you are required to receive training on the job which is typically supervised by senior underwriters. This training will teach you about the common risk factors and basic applications used in underwriting. However, as you progress in your skills level and start gaining more experience, you can start working independently and take on more responsibility.

Key Responsibilities of an Insurance Underwriter: What You Need to Know

Insurance underwriters often conduct independent investigations into applicants, depending on the insurance type. This may involve credit or background checks. When dealing with property insurance, they might enlist professional appraisers for accurate assessments.

Unlike actuaries who evaluate risks on a broad scale, insurance underwriters focus on the specifics. They set detailed policy terms and conditions for each application, ensuring adherence to insurance carrier guidelines. This includes determining the premium the insured will pay.

Most insurance underwriters work a standard 40-hour week from a fixed office location. However, some roles may require travel. For instance, underwriters insuring workplaces, ships, or construction sites must visit these locations to assess risks accurately.

Is Underwriting Worth It?

A career in underwriting might be appealing to people who have analytical skills and want to pursue a career that further polishes these skills as well as put them to good use. However, underwriting positions can also act as a stepping stone for people who wish to gain opportunities in general management within the insurance industry. However, in specialties such as underwriting for personal insurance, processing data in a fixed office location can become quite repetitive and mechanical.

As per an insurance underwriter’s salary, the median annual compensation is $54,803 according to data obtained in January 2019. The top percent of insurance underwriters can also earn up to $85,000 or more.

Underwriters have a key position in the organization they work at. If you pursue a career in the field of underwriting, you are guaranteed to be in a position where you are respected and valued as an employee. However, understanding the business’s level of risk can be a huge responsibility as making the wrong judgement call can cause severe losses to the company and leave them paying out-of-their pocket to cover them up. So if you do decide to pursue underwriting, you have to have impeccable decision making skills and be ready to enter an intense industry.

Conclusion

A career in underwriting offers a unique blend of analytical challenges and opportunities for professional growth. By evaluating financial risks and determining policy terms, underwriters play a crucial role in the insurance and financial sectors. Whether focusing on insurance, mortgages, or personal loans, this profession demands a keen eye for detail, strong problem-solving skills, and a solid understanding of risk management.

Aspiring underwriters should pursue relevant education and certifications, such as those from the Insurance Institute of America (IIA) or the American Institute for Chartered Property Casualty Underwriters (AICPCU). While entry-level positions may not require advanced qualifications, obtaining certifications like the Chartered Property and Casualty Underwriter (CPCU) can significantly enhance career prospects and advancement opportunities.

The role can be rewarding, offering a stable career with competitive salaries and the potential for upward mobility. However, it also comes with responsibilities, as the accuracy of risk assessments directly impacts the financial health of the organization. For those with a passion for analysis and a commitment to precision, underwriting presents a valuable career path with opportunities to make a significant impact in the industry.