Insurance Underwriters

Summary

insurance underwriters image
Insurance underwriters determine the risk of insuring a client.
Quick Facts: Insurance Underwriters
2012 Median Pay $62,870 per year
$30.22 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, 2012 106,300
Job Outlook, 2012-22 -6% (Decline)
Employment Change, 2012-22 -6,500

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 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 for insurance underwriters was $62,870 in May 2012.

Job Outlook

Employment of insurance underwriters is projected to decline 6 percent from 2012 to 2022. Automated underwriting software allows 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.

More Information, Including Links to O*NET

Learn more about insurance underwriters by visiting additional resources, including O*NET, a source on key characteristics of workers and occupations.

What Insurance Underwriters Do About this section

Insurance underwriters
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
  • Contact field representatives, medical personnel, and others to obtain further information
  • Decide whether to offer insurance
  • Determine appropriate premiums and amounts of coverage

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.

Underwriters analyze the risk factors on an application. For instance, if an applicant reports a previous bankruptcy, the underwriter must determine whether this is relevant for the current policy. They would consider how far in the past this 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 job duties are similar, the criteria that underwriters use 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

Insurance underwriters
Most underwriters work full time.

Insurance underwriters held about 106,300 jobs in 2012. They work indoors in offices. Some property and casualty underwriters may visit properties to assess them in person. The following industries employed the most insurance underwriters in 2012:

Insurance carriers72%
Agencies, brokerages, and other insurance related activities18
Credit intermediation and related activities3
Management of companies and enterprises2

                       

Work Schedules

Most underwriters work full time.

How to Become an Insurance Underwriter About this section

Insurance underwriters
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.

Licenses, Certifications, and Registrations

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 underwriters with at least 3 years of insurance experience, The Institutes offers the Chartered Property and Casualty Underwriter (CPCU) designation.

For beginning underwriters, The Institutes offers a training program. The Institutes 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 of Financial Services 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.

Important 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 About this section

Insurance Underwriters

Median annual wages, May 2012

Insurance underwriters

$62,870

Business and financial operations occupations

$62,500

Total, all occupations

$34,750

 

The median annual wage for insurance underwriters was $62,870 in May 2012. 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 $39,050, and the top 10 percent earned more than $109,900.

In May 2012, the median annual wages for insurance underwriters in the top four industries in which they worked were as follows:

Credit intermediation and related activities$66,260
Insurance carriers63,820
Management of companies and enterprises61,680
Agencies, brokerages, and other insurance
related activities
59,340
Most underwriters work full time.

Job Outlook About this section

Insurance Underwriters

Percent change in employment, projected 2012-22

Business and financial operations occupations

13%

Total, all occupations

11%

Insurance underwriters

-6%

 

Employment of insurance underwriters is projected to decline 6 percent from 2012 to 2022. Automated underwriting software allows 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.                                   

Job Prospects

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

Employment projections data for insurance underwriters, 2012-22
Occupational Title SOC Code Employment, 2012 Projected Employment, 2022 Change, 2012-22 Employment by Industry
Percent Numeric

SOURCE: U.S. Bureau of Labor Statistics, Employment Projections program

Insurance underwriters

13-2053 106,300 99,800 -6 -6,500 [XLS]

Similar Occupations About this section

This table shows a list of occupations with job duties that are similar to those of insurance underwriters.

Occupation Job Duties ENTRY-LEVEL EDUCATION Help 2012 MEDIAN PAY Help
Actuaries

Actuaries

Actuaries analyze the financial costs of risk and uncertainty. They use mathematics, statistics, and financial theory to assess the risk that an event will occur and they help businesses and clients develop policies that minimize the cost of that risk. Actuaries’ work is essential to the insurance industry.

Bachelor’s degree $93,680
Budget analysts

Budget Analysts

Budget analysts help public and private institutions organize their finances. They prepare budget reports and monitor institutional spending.

Bachelor’s degree $69,280
Claims adjusters, appraisers, examiners, and investigators

Claims Adjusters, Appraisers, Examiners, and Investigators

Claims adjusters, appraisers, examiners, and investigators evaluate insurance claims. They decide whether an insurance company must pay a claim, and if so, how much.

See How to Become One $59,850
Cost estimators

Cost Estimators

Cost estimators collect and analyze data in order to estimate the time, money, materials, and labor required to manufacture a product, construct a building, or provide a service. They generally specialize in a particular industry or type of product.

Bachelor’s degree $58,860
Insurance sales agents

Insurance Sales Agents

Insurance sales agents help insurance companies generate new business by contacting potential customers and selling one or more types of insurance. Insurance sales agents explain various insurance policies and help clients choose plans that suit them.

High school diploma or equivalent $48,150
Loan officers

Loan Officers

Loan officers evaluate, authorize, or recommend approval of loan applications for people and businesses.

Bachelor’s degree $59,820
Suggested citation:

Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2014-15 Edition, Insurance Underwriters,
on the Internet at http://www.bls.gov/ooh/business-and-financial/insurance-underwriters.htm (visited September 15, 2014).

Publish Date: Wednesday, January 8, 2014