Occupation Profile for Insurance Underwriters

Review individual applications for insurance to evaluate degree of risk involved and determine acceptance of applications.

 
 

Significant Points

  • Most large insurance companies prefer to hire people who have a college degree in business administration or finance with courses in accounting.
  • Continuing education is necessary for advancement.
  • Employment is expected to grow more slowly than average as the spread of underwriting software increases worker productivity.
  • Job opportunities should be best for those with a background in finance and strong computer and communication skills.

 

 
 
Overview
$52,350.00 Median Annual Wage 3,000 Average Job Openings Per Year
1.6 Average Unemployment Percentage 15.7 Percentage That Completed High School
104,000 Employment Numbers in 2006 31.6 Percentage That Had Some College
111,000 Employment Numbers in 2016 (est.) 52.8 Percentage That Went Beyond College Degree

Sample Job Titles
Account Underwriter
Automobile and Property Underwriter
Bond Underwriter
Commercial Lines Underwriter
Commercial Underwriter
Customer Service Representative
Insurance Analyst
Insurance Underwriter
Insurance Writer
Marine Underwriter
Personal Lines Underwriter
Property Underwriter
Reviewer
Risk Analyst
Sales, Reviewer
Underwriter
Underwriting Account Representative
Underwriting Manager
Underwriting Service Representative

Training
  • These occupations usually involve using communication and organizational skills to coordinate, supervise, manage, or train others to accomplish goals. Examples include funeral directors, electricians, forest and conservation technicians, legal secretaries, interviewers, and insurance sales agents.
  • Most occupations in this zone require training in vocational schools, related on-the-job experience, or an associate's degree. Some may require a bachelor's degree.
  • Previous work-related skill, knowledge, or experience is required for these occupations. For example, an electrician must have completed three or four years of apprenticeship or several years of vocational training, and often must have passed a licensing exam, in order to perform the job.
  • Employees in these occupations usually need one or two years of training involving both on-the-job experience and informal training with experienced workers.

Although there are no formal education requirements for becoming an underwriter, many employers prefer candidates with a bachelor’s degree or professional designation, some insurance-related experience, and strong computer skills. Much of what an underwriter does may be learned through on-the-job training, so the majority of underwriters start their careers as trainees.

Education and training. For entry-level underwriting jobs, most large insurance companies prefer college graduates who have a degree in business administration or finance with courses or experience in accounting. However, a bachelor’s degree in almost any field—plus courses in business law and accounting—provides a good general background and may be sufficient to qualify an individual. Because computers are an integral part of most underwriters’ jobs, some coursework with computers is also beneficial. Many employers prefer to hire candidates with several years of related experience in underwriting or insurance.

New employees usually start as underwriter trainees or assistant underwriters. They may help collect information on applicants and evaluate routine applications under the supervision of an experienced risk analyst. Property and casualty trainees study claims files to become familiar with factors associated with certain types of losses. Many larger insurers offer work-study training programs, lasting from a few months to a year. As trainees gain experience, they are assigned policy applications that are more complex and cover greater risks.

The computer programs many underwriters use to assess risk are always being improved upon and updated, so on-the-job computer training may continue throughout an underwriter’s career.

Other qualifications. Underwriting can be a satisfying career for people who enjoy analyzing information and paying attention to detail. In addition, underwriters must possess good judgment in order to make sound decisions. Excellent communication and interpersonal skills also are essential, as much of the underwriter’s work involves dealing with agents and other insurance professionals.

Certification and advancement. Continuing education is necessary for advancement. Independent-study programs for experienced underwriters are available. The Insurance Institute of America offers a training program for beginning underwriters. It also offers the designation of Associate in Commercial Underwriting (ACU) for those starting a career in underwriting business insurance policies. People interested in underwriting personal insurance policies may earn the Associate in Personal Insurance (API) designation. To earn either the ACU or API designation, underwriters complete a series of courses and examinations that generally lasts 1 to 2 years.

The American Institute for Chartered Property Casualty Underwriters awards the Chartered Property and Casualty Underwriter (CPCU) designation to experienced underwriters. Earning the CPCU designation requires passing 8 exams, having at least 3 years of insurance experience, and abiding by the Institute’s and CPCU Society’s code of professional ethics.

The American College offers the equivalent Chartered Life Underwriter (CLU) designation and the Registered Health Underwriter (RHU) designation for life and health insurance professionals.

Experienced underwriters who complete courses of study may advance to senior underwriter or underwriting manager positions. Some underwriting managers are promoted to senior managerial jobs. Some employers require a master’s degree to achieve this level. Other underwriters are attracted to the earnings potential of sales and, therefore, obtain State licenses to sell insurance and related financial products as agents or brokers.

Nature of Work

Insurance companies protect individuals and organizations from financial loss by assuming billions of dollars in risk each year—risks of car accident, property damage, illness, and other occurrences. Underwriters decide if insurance is provided and under what terms. They are needed to identify and calculate the risk of loss from policyholders, establish who receives a policy, determine the appropriate premium, and write policies that cover this risk. An insurance company may lose business to competitors if the underwriter appraises risks too conservatively, or it may have to pay excessive claims if the underwriting actions are too liberal.

With the aid of computers, underwriters analyze information in insurance applications to determine whether a risk is acceptable and will not result in a loss. Insurance applications often are supplemented with reports from loss-control representatives, medical reports, reports from data vendors, and actuarial studies. Underwriters then must decide whether to issue the policy and, if so, determine the appropriate premium to charge. In making this determination, underwriters consider a wide variety of factors about the applicant. For example, an underwriter working in health insurance may consider age, family history, and current health whereas an underwriter working for a property-casualty insurance company is concerned with the causes of loss to which property is exposed and the safeguards taken by the applicant. Therefore, underwriters serve as the main link between the insurance carrier and the insurance agent. On occasion, they accompany sales agents to make presentations to prospective clients.

Technology plays an important role in an underwriter’s job. Underwriters use computer applications called smart systems to manage risks more efficiently and accurately. These systems analyze and rate insurance applications, recommend acceptance or denial of the risk, and adjust the premium rate in accordance with the risk. With these systems, underwriters are better equipped to make sound decisions and avoid excessive losses.

The Internet also has affected the work of underwriters. Many insurance carriers’ computer systems are now linked to various databases on the Internet that allow immediate access to information—such as driving records—necessary in determining a potential client’s risk. This kind of access reduces the amount of time and paperwork necessary for an underwriter to complete a risk assessment.

Although there are many possible lines of insurance to work in, most underwriters specialize in one of four broad categories: life, health, mortgage, and property and casualty. Life and health insurance underwriters may further specialize in group or individual policies.

An increasing proportion of insurance sales, particularly in life and health insurance, are being made through group contracts. A standard group policy insures everyone in a specified group through a single contract at a standard premium rate. The group underwriter analyzes the overall composition of the group to ensure that the total risk is not excessive. Another type of group policy provides members of a group—senior citizens, for example—with individual policies reflecting their needs. These usually are casualty policies, such as those covering automobiles. The casualty underwriter analyzes the application of each group member and makes individual appraisals. Some group underwriters meet with union or employer representatives to discuss the types of policies available to their group.

Property and casualty underwriters usually specialize in either commercial or personal insurance and then by type of risk insured, as in fire, homeowners’, automobile, marine, or liability insurance, as well as workers’ compensation. In cases where property-casualty companies provide insurance through a single package policy covering various types of risks, the underwriter must be familiar with different lines of insurance. For business insurance, the underwriter often must be able to evaluate the firm’s entire operation in appraising its application for insurance.

Work environment. Underwriters have desk jobs that require no unusual physical activity. Their offices usually are comfortable and pleasant. Most underwriters are based in a company headquarters or regional branch office, but they occasionally attend meetings away from home for several days. Construction and marine underwriters frequently travel to inspect worksites and assess risks.

Although underwriters typically work a standard 40-hour week, more are working longer hours due to the downsizing of many insurance companies. For some underwriters, evening and weekend hours are not uncommon.

Related Occupations

Sources: Career Guide to Industries (CGI), Occupational Information Network (O*Net), Occupation Outlook Handbook (OOH)
Earnings

Median annual earnings of wage and salary insurance underwriters were $52,350 in May 2006. The middle 50 percent earned between $40,000 and $71,070 a year. The lowest 10 percent earned less than $32,270, while the highest 10 percent earned more than $92,240. Median annual earnings of underwriters working with insurance carriers were $52,900, while underwriters’ median annual earnings in agencies, brokerages, and other insurance related activities were $51,820.

Insurance companies usually provide better-than-average benefits, including retirement plans and employer-financed group life and health insurance. Insurance companies usually pay tuition for underwriting courses that their trainees complete, and some also offer salary incentives.

For the latest wage information:

The above wage data are from the Occupational Employment Statistics (OES) survey program, unless otherwise noted. For the latest National, State, and local earnings data, visit the following pages:

  • Insurance underwriters
  • Job Outlook

    Although growth is expected to be more slowly than the average for all occupations, job prospects will remain good because of the continuous turnover experienced in this occupation.

    Employment change. Employment of underwriters is expected to grow by 6 percent during the 2006-16 decade, which is slower than the average for all occupations. Underwriting software will continue to make workers more productive, but it does not do away with the need for human skills. As a result, employment of underwriters will increase as a growing economy and population expands the insurance needs of businesses and individuals.

    Demand for underwriters also is expected to improve as insurance carriers try to restore profitability 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. This renewed interest in underwriting should result in some long-term growth for underwriters.

    Job prospects. Job opportunities should be best for those with experience in related insurance jobs, a background in finance, and strong computer and communication skills. In addition to openings arising from job growth, openings also will be created by the need to replace underwriters who retire or transfer to another occupation.

    New and emerging fields of insurance will be the source of the most job opportunities for underwriters. Insurance carriers are always assessing new risks and offering new types of policies to meet changing circumstances. Underwriters are needed particularly in the area of product development, where they assess risks and set the premiums for new lines of insurance. One new line of insurance being offered by life insurance carriers is long-term care insurance and it may provide job opportunities for underwriters.

    Employment

    Insurance underwriters held about 104,000 jobs in 2006. Insurance carriers employed 65 percent of all underwriters. Most of the remaining underwriters work in insurance agencies or for organizations that offer insurance services to insurance companies and policyholders. A small number of underwriters work in agencies owned and operated by banks, mortgage companies, and real estate firms.

    Most underwriters are based in the insurance company’s home office, but some, mainly in the property and casualty area, work out of regional branch offices of the insurance company. These underwriters usually have the authority to underwrite most risks and determine an appropriate rating without consulting the home office.

    Knowledge
    • Mathematics — Knowledge of arithmetic, algebra, geometry, calculus, statistics, and their applications.
    • Engineering and Technology — Knowledge of the practical application of engineering science and technology. This includes applying principles, techniques, procedures, and equipment to the design and production of various goods and services.
    • Sales and Marketing — Knowledge of principles and methods for showing, promoting, and selling products or services. This includes marketing strategy and tactics, product demonstration, sales techniques, and sales control systems.
    • Medicine and Dentistry — Knowledge of the information and techniques needed to diagnose and treat human injuries, diseases, and deformities. This includes symptoms, treatment alternatives, drug properties and interactions, and preventive health-care measures.
    • Physics — Knowledge and prediction of physical principles, laws, their interrelationships, and applications to understanding fluid, material, and atmospheric dynamics, and mechanical, electrical, atomic and sub- atomic structures and processes.
    Skills
    • Equipment Maintenance — Performing routine maintenance on equipment and determining when and what kind of maintenance is needed.
    • Coordination — Adjusting actions in relation to others' actions.
    • Active Learning — Understanding the implications of new information for both current and future problem-solving and decision-making.
    • Writing — Communicating effectively in writing as appropriate for the needs of the audience.
    • Troubleshooting — Determining causes of operating errors and deciding what to do about it.
    Abilities
    • Near Vision — The ability to see details at close range (within a few feet of the observer).
    • Stamina — The ability to exert yourself physically over long periods of time without getting winded or out of breath.
    • Explosive Strength — The ability to use short bursts of muscle force to propel oneself (as in jumping or sprinting), or to throw an object.
    • Oral Comprehension — The ability to listen to and understand information and ideas presented through spoken words and sentences.
    • Hearing Sensitivity — The ability to detect or tell the differences between sounds that vary in pitch and loudness.
    Tasks
    • Core — Review company records to determine amount of insurance in force on single risk or group of closely related risks.
    • Supplemental — Authorize reinsurance of policy when risk is high.
    • Core — Examine documents to determine degree of risk from such factors as applicant financial standing and value and condition of property.
    • Core — Decline excessive risks.
    • Core — Write to field representatives, medical personnel, and others to obtain further information, quote rates, or explain company underwriting policies.
    Activities
    • Monitoring and Controlling Resources — Monitoring and controlling resources and overseeing the spending of money.
    • Guiding, Directing, and Motivating Subordinates — Providing guidance and direction to subordinates, including setting performance standards and monitoring performance.
    • Assisting and Caring for Others — Providing personal assistance, medical attention, emotional support, or other personal care to others such as coworkers, customers, or patients.
    • Repairing and Maintaining Electronic Equipment — Servicing, repairing, calibrating, regulating, fine-tuning, or testing machines, devices, and equipment that operate primarily on the basis of electrical or electronic (not mechanical) principles.
    • Getting Information — Observing, receiving, and otherwise obtaining information from all relevant sources.
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