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Insurance underwriters decide whether to provide insurance and under what terms. They evaluate insurance applications and determine coverage amounts and premiums.
Insurance underwriters typically do the following:
Underwriters are the main link between an insurance company and an insurance agent. Insurance underwriters use computer software programs to determine whether to approve an applicant. They take specific information about a client and enter it into a program. The program then provides recommendations on coverage and premiums. Underwriters evaluate these recommendations and decide whether to approve or reject the application. If a decision is difficult, they may consult additional sources, such as medical documents and credit scores.
Underwriters analyze the risk factors appearing on an application. For instance, if an applicant reports a previous bankruptcy, the underwriter must determine whether that information is relevant to the current policy. The underwriter would consider how far in the past the bankruptcy occurred and how the applicant’s financial situation has changed since the applicant filed for bankruptcy.
Insurance underwriters must achieve a balance between risky and cautious decisions. If underwriters allow too much risk, the insurance company will pay out too many claims. But if they don't approve enough applications, the company will not make enough money from premiums.
Most insurance underwriters specialize in one of three broad fields: life, health, and property and casualty. Although the job duties in each field are similar, the criteria that underwriters use vary. For example, for someone seeking life insurance, underwriters consider age and financial history. For someone applying for car insurance (a form of property and casualty insurance), underwriters consider the person’s driving record.
Within the broad field of property and casualty, underwriters may specialize even further, into commercial (business) insurance or personal insurance. They may also specialize by the type of policy, such as insuring automobiles, boats (marine insurance), or homes (homeowners’ insurance).
Insurance underwriters hold about 103,400 jobs. The industries that employ the most insurance underwriters are as follows:
|Direct insurance (except life, health, and medical) carriers||47%|
|Insurance agencies and brokerages||14|
|Direct health and medical insurance carriers||7|
|Other insurance related activities||5|
|Management of companies and enterprises||4|
Underwriters work indoors in offices. Some property and casualty underwriters may visit properties to assess them in person.
Most underwriters work full time.
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Employers prefer to hire candidates who have a bachelor’s degree. However, insurance-related work experience and strong computer skills may be enough. Certification is generally necessary for advancement to senior underwriter and underwriter manager positions.
Most firms prefer to hire applicants who have a bachelor’s degree. Courses in business, finance, economics, and mathematics are particularly helpful.
Beginning underwriters usually work as trainees under the supervision of senior underwriters. Trainees work on basic applications and learn the most common risk factors. As they gain experience, they become responsible for more complex applications and work independently.
Employers often expect underwriters to become certified through coursework. Courses are important for keeping current with new insurance policies and for adjusting to new technology and changes in state and federal regulations. Certification is often necessary for advancement to senior underwriter and underwriter management positions. Many certification options are available.
For underwriters with at least 3 years of insurance experience, The Institutes offer the Chartered Property and Casualty Underwriter (CPCU) designation. For beginning underwriters, The Institutes offer a training program.
The Institutes also offer two special designations: Associate in Commercial Underwriting (AU) and Associate in Personal Insurance (API). To earn either the AU or API designation, underwriters complete a series of courses and exams that generally take 1 to 2 years.
The National Association of Insurance and Financial Advisors offers an introductory course in basic insurance concepts: the Life Underwriter Training Council Fellow (LUTCF). The American College of Financial Services offers the Chartered Life Underwriter (CLU) certification.
Analytical skills. Underwriters must be able to evaluate information from a variety of sources and solve complex problems.
Decisionmaking skills. Underwriters must consider the costs and benefits of various decisions and choose the appropriate one.
Detail oriented. Underwriters must pay attention to detail, because each individual item on an insurance application can affect the coverage decision.
Interpersonal skills. Underwriters need good communication and interpersonal skills because much of their work involves dealing with other people, such as insurance agents.
Math skills. Determining the probability of losses on an insurance policy and calculating appropriate premiums require mathematical ability.
The median annual wage for insurance underwriters is $64,220. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. The lowest 10 percent earned less than $39,260, and the highest 10 percent earned more than $113,010.
The median annual wages for insurance underwriters in the top industries in which they work are as follows:
|Direct health and medical insurance carriers||$64,290|
|Other insurance related activities||64,160|
|Direct insurance (except life, health, and medical) carriers||63,700|
|Management of companies and enterprises||62,130|
|Insurance agencies and brokerages||61,680|
Most underwriters work full time.
Employment of insurance underwriters is projected to decline 11 percent over the next ten years. Automated underwriting software allows workers to process applications more quickly than before, reducing the need for underwriters. As this technology improves, more underwriting decisions can be made automatically. However, there still will be a need for underwriters to evaluate automated recommendations, particularly in complex or specific fields, such as marine insurance.
Job opportunities should be best for those with a background in finance and strong computer and analytical skills.
|Occupational Title||Employment, 2014||Projected Employment, 2024||Change, 2014-24|