Education and Training: College
Salary: Median—$48,550 per year
Employment Outlook: Fair
Definition and Nature of the Work
Insurance underwriters evaluate applications for insurance policies. They assess the degree of risk to the insurance company of the person or property listed on the application. An insurance "risk" is the probability that the applicant will have to collect under the terms of the policy. By deciding which risks to insure, insurance underwriters (often called just underwriters) affect the financial well-being of the insurance company. If underwriters appraise risks either too conservatively or too liberally, insurance companies may lose money.
Insurance underwriters generally specialize in one of three principal types of insurance: life, property and liability, or health. They handle policy applications both from individuals and from businesses.
Insurance underwriters need accurate information to decide whether a policy is an acceptable risk. For example, to review an application for automobile insurance, the underwriter takes into account the applicant's previous loss record as well as age, medical reports, credit rating, driving record, and other information that may be helpful in evaluating the risk. Insurance underwriters may compare applications with similar policies and consult actuarial studies to determine their company's record of losses.
After compiling the necessary information, the underwriter evaluates the insurance application in relation to the company's underwriting standards. The underwriter may use complex computer programs that rate applications and make recommendations. The underwriter may decide to issue the policy as requested, to modify the policy, or to reject it. The underwriter outlines the terms of the acceptable policy and determines the rates or premiums.
Education and Training Requirements
Most insurance companies prefer to hire college graduates. However, some high school graduates who begin as underwriting clerks may advance to positions as underwriters. Courses in mathematics, statistics, business, and insurance are helpful. Beginners usually start as trainees or junior underwriters. Most insurance companies offer training programs, which are considered essential to an insurance underwriter's education and career.
The American Institute for Charted Property Casualty Underwriters offers a certification for insurance underwriters. The certification, known as the Chartered Property and Casualty Underwriter (CPCU) designation, can only be earned by insurance underwriters who have been in the industry for three years. To earn the designation, candidates must pass ten exams and abide by a professional code of ethics.
Getting the Job
A college placement office may be able to help a graduating student find a job as an insurance underwriter. Interested individuals should check Internet job sites and the classified ads of local newspapers and insurance journals. Candidates can also apply to various employment agencies. A person may increase his or her chances of getting a job offer after graduation by working part time or during the summer for an insurance company.
Advancement Possibilities and Employment Outlook
Advancement possibilities depend on the size of the company. After completing the training period, the underwriter may advance to various levels within the department. An experienced underwriter may become chief underwriter or underwriting manager of the department. Some insurance underwriters are promoted to administrative positions.
According to the U.S. Bureau of Labor Statistics, insurance underwriters held 101,000 jobs in 2004. Employment of insurance underwriters was expected to grow more slowly than average through the year 2014. More and more insurance companies are using computer programs that automatically make recommendations on insurance applications and cut down on the number of underwriters needed. Many openings, however, will occur to replace experienced underwriters who retire or leave their jobs for other reasons.
Most insurance underwriters work a forty-hour week. Although underwriters work primarily in their offices, they may accompany salespeople on appointments with prospective customers. Insurance underwriters must be able to make prompt decisions and communicate their ideas to others. They must be skilled at analysis and at gathering information, and they should enjoy working with details.
Where to Go for More Information
American Institute for Chartered Property and Casualty Underwriters and Insurance Institute of America
720 Providence Rd.
PO Box 3016
Malvern, PA 19355
Insurance Information Institute
110 William St.
New York, NY 10038
National Association of Insurance and Financial Advisors
2901 Telestar Ct.
PO Box 12012
Falls Church, VA 22042
Earnings and Benefits
The salaries of insurance underwriters vary depending on the location, size, and type of insurance company. Insurance underwriters earned a median annual salary of $48,550 in 2004, according to the Bureau of Labor Statistics. Those with the top 10 percent of salaries earned more than $86,110. Most insurance companies offer their employees health and life insurance, paid holidays and vacations, and pension plans.