Insurance underwriters are relied upon for their ability to review insurance applications, evaluate the amount of risk involved, and set the coverage and premium accordingly. Their work is vital to financial and insurance company’s sustainability. As in any business, these firms must manage risk and balance income with expenses in order to remain viable.
Insurance underwriters use software programs to review and analyze applications. They typically consult predetermined criteria to decide whether to approve or reject an application. If the application is approved, they then set coverage limits and determine the premium the insured will pay for coverage. Insurance underwriters may also consult additional sources, such as medical documents and credit scores, to make their decisions.
Insurance underwriters must achieve a balance in approving coverage. If they are risky in their decision-making, the company may pay out more claims than it can afford. On the other hand, if they are overly cautious and turn down too many policies, the company will not earn enough income from premiums to pay out their claims.
Many insurance underwriters choose to specialize in life, health, mortgage, or property and casualty insurance. Job duties among these specializations are similar and may include:
- Accepting, modifying or rejecting risks based on review of information such as loss history, nature of risk, age and company guidelines
- Verifying coverage eligibility, documenting exceptions and providing supporting information
- Communicating decisions, and resolving customer and insurance agent concerns
- Developing plans to increase profitability
Job Outlook and Salary Range for Insurance Underwriters
The U.S. Bureau of Labor Statics (BLS) reports that job opportunities are expected to be better for qualified individuals with strong computer and communication skills, and a background in finance, as they will be needed to evaluate decisions made with automated underwriting software.
The median salary for underwriters was $67,680 in May 2016, according to the BLS. Those at the upper 10% of the salary range had a median salary of $121,430.
Insurance carriers are the largest employers of underwriters and offer an average salary of $75,170, according to the BLS.
Employment opportunities and salary potential may vary depending on location, experience, education and other factors.
Education and Training for Insurance Underwriters
Insurance underwriter positions typically require a bachelor’s degree in accounting, finance, economics or a related field, according to the BLS. Coursework in business, finance, mathematics and economics may be beneficial.
Many employers seek applicants with work experience and some companies may show preference to candidates with professional designations, such as Chartered Property Casualty Underwriter (CPCU). Obtaining the CPCU designation involves passing examinations, meeting experience requirements and adhering to a professional code of ethics.
An attention to detail, interest in analysis, and strong technical and interpersonal skills are common attributes of effective insurance underwriters.
Entry-level insurance underwriters often work as assistants under the supervision of senior staff members. After gaining experience, they may work independently. Additional training, education and professional development can lead to positions with more responsibility, such as senior insurance underwriter and underwriting manager.
Military Occupational Specializations
Servicemembers in a variety of military roles utilize skills similar to those of insurance underwriters in the civilian marketplace:
- In the U.S. Army, roles include financial management technician.
- U.S. Navy roles include health care administration.
- In the U.S. Marine Corps, roles include financial management officer.
- U.S. Air Force roles include financial management comptroller and health services management.