Insurance underwriters decide whether to provide insurance, and under what terms. They evaluate insurance applications and determine coverage amounts and premiums.

Duties

Insurance underwriters typically do the following:

  • Analyze information stated on insurance applications
  • Determine the risk involved in insuring a client
  • Screen applicants on the basis of set criteria
  • Evaluate recommendations from underwriting software
  • Contact field representatives, medical personnel, and others to obtain further information
  • Decide whether to offer insurance
  • Determine appropriate premiums and amounts of coverage
  • Review and update the rules that govern automation software

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.

For simple and common types of insurance, such as automobile insurance, underwriters can typically rely on automated recommendations. For more specific and complex insurance types, such as workers’ compensation, underwriters need to rely more on their own analytical insight.

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 policy being applied for. The underwriter would likely 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 the person’s 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 for automobiles, boats (marine insurance), or homes (homeowners’ insurance).

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Work Environment

Insurance underwriters held about 110,400 jobs in 2018. The largest employers of insurance underwriters were as follows:

Direct insurance (except life, health, and medical) carriers 42%
Insurance agencies and brokerages 22
Other insurance related activities 7
Direct health and medical insurance carriers 4
Credit intermediation and related activities 4

Underwriters work indoors in offices. Although underwriters spend most of their time working alone on applications at a computer, they sometimes must handle customer inquiries.

Some property and casualty underwriters may travel to assess properties in person.

Work Schedules

Most underwriters work full time.

Education and Training

Employers prefer to hire candidates who have a bachelor’s degree. However, insurance-related work experience and strong computer skills may be enough for some positions. Certification is generally necessary for advancement to senior underwriter and underwriter manager positions.

Education

Most employers prefer to hire applicants who have a bachelor’s degree. Although a specific major is not required, some coursework in business, finance, economics, and mathematics is helpful.

Training

Beginning underwriters usually work as trainees under the supervision of senior underwriters. Trainees work on basic applications and learn the most common risk factors. Some companies offer training programs that include classroom instruction on the basics of underwriting.

As new underwriters gain experience, they work independently and handle more complex applications.

Licenses, Certifications, and Registrations

Employers often expect underwriters to become certified through coursework. These 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 2 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 several other designations in insurance specialties, including the Associate in Commercial Underwriting (AU) and Associate in Personal Insurance (API). To earn these designations, underwriters complete a series of courses and exams that generally takes 1 to 2 years.

The National Association of Insurance and Financial Advisors offers the Life Underwriter Training Council Fellow (LUTCF) designation, which consists of a three-part curriculum in basic insurance concepts.

The American College of Financial Services offers the Chartered Life Underwriter (CLU) certification. This certification consists of five core courses and three electives, and candidates must have 3 years of related work experience.

Personality and Interests

Insurance underwriters typically have an interest in the Thinking, Persuading and Organizing interest areas, according to the Holland Code framework. The Thinking interest area indicates a focus on researching, investigating, and increasing the understanding of natural laws. The Persuading interest area indicates a focus on influencing, motivating, and selling to other people. The Organizing interest area indicates a focus on working with information and processes to keep things arranged in orderly systems.

If you are not sure whether you have a Thinking or Persuading or Organizing interest which might fit with a career as an insurance underwriter, you can take a career test to measure your interests.

Insurance underwriters should also possess the following specific qualities:

Analytical skills. Underwriters must be able to evaluate information from a variety of sources and solve complex problems.

Decision-making 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.

Pay

The median annual wage for insurance underwriters was $70,020 in May 2019. 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 $42,360, and the highest 10 percent earned more than $124,320.

In May 2019, the median annual wages for insurance underwriters in the top industries in which they worked were as follows:

Credit intermediation and related activities      $75,390
Other insurance related activities      70,110
Direct insurance (except life, health, and medical) carriers                 69,760
Direct health and medical insurance carriers      68,700
Insurance agencies and brokerages      68,430

Most underwriters work full time.

Job Outlook

Employment of insurance underwriters is projected to decline 5 percent from 2018 to 2028. Automated underwriting software allows workers to process applications more quickly than before, reducing the need for as many underwriters. As this technology improves and becomes more widely adopted in the insurance industry, more underwriting decisions will likely be made automatically.

However, there still will be a need for underwriters to review and update the criteria that run the automation. In addition, their analytical insight will still be needed in complex or specific insurance fields, such as workers’ compensation, marine insurance, or health insurance.

Job Prospects

Job opportunities should be best for those with a background in finance and strong computer and analytical skills.

For More Information

For more information about property and casualty insurance, visit

Insurance Information Institute

For more information about certifications, visit

The Institutes

The American College of Financial Services

National Association of Insurance and Financial Advisors

FAQ

Where does this information come from?

The career information above is taken from the Bureau of Labor Statistics Occupational Outlook Handbook. This excellent resource for occupational data is published by the U.S. Department of Labor every two years. Truity periodically updates our site with information from the BLS database.

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