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Insurance Underwriter Career, Job and Training Information

The following are a few Insurance Underwriter career and job highlights:

  • The need for underwriters will always exist as long as insurance is considered a necessity for people and businesses.
  • College graduates who have a degree in finance or business administration with courses in accounting are more likely to find opportunities for employment with large insurance companies. However, a bachelor’s degree in any field along with courses in accounting and business law may be adequate in order to meet qualification requirements.

Insurance Underwriter Career and Job Description

By assuming billions of dollars in risks each year, insurance companies protect individuals and organizations from significant financial loss. Underwriters are needed to identify and calculate a policyholder’s risk of loss. They also work to establish appropriate premium rates, and to write policies that cover these risks. Great trust is placed in underwriters as an insurance company may have to pay excessive claims if the underwriter is too liberal, or may loose customers to competitors if the underwriter is too stingy.

Aided by computers, underwriters analyze information in insurance applications in order to determine if a risk will not result in a loss and is therefore acceptable. Applications are often supplemented with reports from, medical reports, loss-control consultants, actuarial studies, and data vendors. After an adequate amount of information has been reviewed the underwriter must then decide whether to issue the policy and what appropriate premium to charge. Underwriters serve as the main link between the insurance carrier and the insurance agent in making this determination. On occasion, they may also accompany sales agents to make presentations to prospective clients.

Technology is very important to an underwriter’s job. Computer applications called “smart systems” are used by underwriters to efficiently and accurately manage risks. These systems automatically analyze and rate insurance applications, recommend acceptance or denial of the risk, and adjust the premium rate in accordance with the risk. With the help of these systems, underwriters are better equipped to make sound decisions and avoid excessive losses.

The work of underwriters has also been greatly affected by the Internet. The computer systems of many insurance carriers are now linked to various databases across the Internet allowing immediate access to information. Such information may include driving records which are necessary to determining a prospective client’s risk. Easy access to information reduces the amount of time and paperwork it would otherwise take for an underwriter to complete a risk assessment.
Most underwriters specialize in one of three major categories of insurance-life, health, or property and casualty. Insurance underwriters specializing in either life or heath may go on to further specialize in group or individual policies.

Underwriters specializing in Property and Casualty usually localize their specialization into either personal or commercial insurance, and then further by the type of risk insured; such as homeowners, automobile, fire, liability, workers’ compensation or marine. In some instances casualty companies provide insurance through a single “package” policy which covers a wide range of risk types. In situations such as this the underwriter must be familiar with different lines of insurance. For example, in business insurance cases the underwriter must often be able to evaluate the firm’s entire operation when appraising its application for insurance.

Group contacts are making up an increasing proportion of insurance sales, particularly in life and health insurance. A standard group policy insures everyone in a specified group through a single contract at a standard premium rate. It is the responsibility of the group underwriter to analyze the overall composition of the group assuring that the total risk is not excessive. Another type of group policy provides members of a group with individual policies reflecting their needs. Such policies are often given to labor unions. Often these are casualty policies, like those covering vehicles. In this case, the casualty underwriter evaluates the application of each group member and makes individual appraisals. Some group underwriters may also meet with union or employer representatives in order to discuss the types of policies that are available to their particular group.

Insurance Underwriter Training and Job Qualifications

Most large companies prefer to hire college graduates who have a degree in finance or business administration even for entry- level underwriting positions. However, a bachelor’s degree in almost any field along with courses in accounting and business law provides a good general background and may be sufficient to meet qualification requirements. Because computers are an essential part of most underwriters’ jobs, computer skills are crucial.

Once hired, new employees usually start out as underwriter trainees or assistant underwriters. Under the supervision of an experienced risk analyst they may help collect information on applicants and evaluate routine applications. Trainees working in property and casualty areas study claims files in order to become more familiar with various aspects associated with specific types of losses. New employees hired by many larger insurers may be offered a work-study program. Work-study programs can last anywhere from a few months to a whole year. As time goes on and more experience is gained, trainees are given more and more responsibilities and are assigned policy applications that are more complex and cover greater risks. Computers are used for more efficient analysis and processing of more complex applications.

For people who enjoy analyzing information and paying close attention to detail, underwriting can be a satisfying career. It is important for underwriters to demonstrate good judgment in order to make reliable and sound decisions. Because much of the underwriter’s work involves dealing with agents and other insurance professionals, excellent communication and interpersonal skills are also essential. Underwriters hoping for advancement must remember that continuing education is vital. Often insurance companies will pay tuition for underwriting courses successfully completed by their trainees. Some may even offer salary incentives. Many independent study courses for more experienced property and casualty underwriters are also available. For those interested in developing a career in underwriting personal insurance policies may complete the requirements necessary to earn an Associate in Personal Insurance designation. To do this underwriters are required to complete a series of courses and examination which generally last from 1 to 2 years.

Underwriters who achieve the third and final stage of an underwriter may be awarded the designation Chartered Property and Casualty Underwriter, which is given out by the American Institute for Chartered Property Casualty Underwriters. Earning a more designation takes about four years, and requires passing eight examinations. The examinations cover a wide range of topics including insurance operations and regulations, risk management, financial management, business and insurance law, and financial institutions; and there are three additional course concentrations in either personal or commercial insurance coverage. Although mainly for underwriters such programs and designations are also meant for everyone working in all aspects of property and casualty insurance. For example, the American College offers the Chartered Life Underwriter (CLU) designation and the Registered Health Underwriter (RHU) designation for all life and health insurance professionals.

Experienced underwriters who complete courses of study may advance to senior underwriter or underwriting manager positions. From there some underwriting managers are promoted to senior managerial jobs. A master’s degree may be required by some employers in order to achieve this level. Other underwriters, attracted to the earnings potential of sales, obtain State licenses to sell insurance and related financial products as agents or brokers.

Insurance Underwriter Job and Employment Opportunities

Through the year 2012 employment opportunities for underwriters are expected to grow about as fast as the average for all occupations. Although workers will continue to become more productive with additional advances in underwriting software, computer software does not do away with the need for human skills. Because of this underwriter employment will continue to increase as the insurance needs of businesses and individuals rise due to continual population growth. Additional job openings will be brought on by the need to replace underwriters who either transfer to another occupation or who retire from the workforce.

Insurance carriers are constantly changing and updating assessing new risks and offering policies to meet a world of ever changing circumstances. Underwriters are of particular importance in the area of product development. Here underwriters assess risks and set the premiums for new lines of insurance. Long term care insurance is one such new line of insurance being offered by life insurance carriers that may provide new job opportunities.

Demand for underwriters is also expected to improve as insurance carriers try to restore profitability in an attempt to make up for an unusually large number of underwriting losses in recent years. As the carriers’ returns on their investments have declined, insurers are placing more emphasis on underwriting to generate revenues. It is expected that this renewed interest in underwriting will result in favorable job opportunities for underwriters in the near future.

Historically employment rates for underwriters has remained relatively steady. Overall, persons with excellent communication and computer skills along with a strong background in finance will have the best opportunities for employment. This profession is less subject to recession and layoffs than other fields because insurance is considered to be a necessity for individuals and businesses both in good times and in times of crisis. Therefore it is expected that the need for underwriters will remain constant throughout time.