Insurance Underwriters

Summary

Insurance underwriters evaluate insurance applications and determine coverage amounts and premiums.

Quick Facts: Insurance Underwriters
2010 Median Pay	$59,290 per year $28.51 per hour
Entry-Level Education	Bachelor’s degree
Work Experience in a Related Occupation	None
On-the-job Training	Moderate-term on-the-job training
Number of Jobs, 2010	101,800
Job Outlook, 2010-20	6% (Slower than average)
Employment Change, 2010-20	6,000

What Insurance Underwriters Do

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

Work Environment

Insurance underwriters work indoors in comfortable offices. Most work full time.

How to Become an Insurance Underwriter

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 necessary for advancement to senior underwriter and underwriter manager positions.

Pay

The median annual wage of insurance underwriters was $59,290 in May 2010.

Job Outlook

Employment of insurance underwriters is expected to increase 6 percent from 2010 to 2020, slower than the average for all occupations. New types of automated underwriting software allow workers to process applications more quickly than before, reducing the need for underwriters.

Similar Occupations

Compare the job duties, education, job growth, and pay of insurance underwriters with similar occupations.

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Contacts for More Information

Learn more about insurance underwriters by contacting these additional resources.

What Insurance Underwriters Do About this section

Insurance underwriters use computer software programs to determine whether an applicant should be approved.

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 in insurance applications
• Determine the risk of insuring a client
• Screen applicants on the basis of set criteria
• Evaluate recommendations from underwriting software
• Decide whether to offer insurance
• Determine appropriate premiums and amounts of coverage
• Write policies to cover potential loss

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, using predetermined criteria, 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.

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 four broad fields: life, health, mortgage, and property and casualty. Although job duties are similar, the criteria used by underwriters 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).

Work Environment About this section

Most underwriters work full time.

Insurance underwriters held about 101,800 jobs in 2010.  They work indoors in a comfortable office setting. Some property and casualty underwriters may visit properties to assess them in person. The following industries employed the most insurance underwriters in 2010:

Work Schedules

Most underwriters work full time.

How to Become an Insurance Underwriter About this section

Most firms prefer to hire applicants with a bachelor’s degree.

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 necessary for advancement to senior underwriter and underwriter manager positions.

Education

Most firms prefer to hire applicants who have a bachelor’s degree. Courses in business, finance, economics, and mathematics are particularly 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. As they gain experience, they become responsible for more complex applications and work independently.

Certification

Employers often expect underwriters to get certification through coursework. These courses are important for keeping current with new insurance policies and 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 beginning underwriters, the Insurance Institute of America offers a training program. The Institute also offers two special designations, an Associate in Commercial Underwriting (AU) and an 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 American College also offers an introductory course in basic insurance concepts: The Life Underwriter Training Council Fellow (LUTCF). They also offer a Chartered Life Underwriter (CLU) and Registered Health Underwriter (RHU) designation.

For underwriters with at least three years of insurance experience, the American Institute for Chartered Property Casualty Underwriters offers the Chartered Property and Casualty Underwriter designation (CPCU).

Important Qualities

Analytical skills. Underwriters must be able to evaluate information and solve complex problems.

Decision-making skills. Underwriters must have the ability to consider the costs and benefits of various decisions and to 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.

Technical skills. Underwriters must be comfortable working with computers and making mathematical calculations.

Pay About this section

The median annual wage of insurance underwriters was $59,290 in May 2010. 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 $36,700, and the top 10 percent earned more than $102,540.

Most underwriters work full time.

Job Outlook About this section

Employment of underwriters is expected to increase 6 percent from 2010 to 2020, slower than the average for all occupations. New types of automated underwriting software allow workers to process applications more quickly than before, reducing the need for underwriters. However, there still will be a need for underwriters to evaluate automated recommendations.

Among underwriter specialties, underwriters working in health insurance are projected to have faster employment growth. Federal healthcare reform will require more individuals to purchase health insurance, leading to an increase in applications. In addition, as the population ages, there will likely be increased demand for long-term care insurance.

Job Prospects

The need to replace workers who retire or transfer to another occupation should create many additional job openings. Job opportunities should be best for those with a background in finance, and strong computer and communication skills.

Contacts for More Information About this section

For more information about property and casualty insurance, visit

Insurance Information Institute

For more information about certifications, visit

American Institute for Chartered Property and Casualty Underwriters and Insurance Institute of America

CPCU Society

The American College