Insurance Underwriters

Summary

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 stated on insurance applications
• Determine the risk involved in 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
• Review and update the rules that govern automation software

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.

For simple and common types of insurance, such as automobile insurance, underwriters can typically rely on automated recommendations. For more specific and complex insurance types, such as workers’ compensation, underwriters need to rely more on their own analytical insight.

Underwriters analyze the risk factors appearing on an application. For instance, if an applicant reports a previous bankruptcy, the underwriter must determine whether that information is relevant to the policy being applied for. The underwriter would likely consider how far in the past the bankruptcy 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 the job duties in each field are similar, the criteria that underwriters use vary. For example, for someone seeking life insurance, underwriters consider the person’s 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 for automobiles, boats (marine insurance), or homes (homeowners’ insurance).

Work Environment About this section

Most underwriters work full time.

Insurance underwriters held about 104,100 jobs in 2016. The largest employers of insurance underwriters were as follows:

Underwriters work indoors in offices. Although underwriters spend most of their time working alone on applications at a computer, they sometimes must handle customer inquiries.

Some property and casualty underwriters may travel to assess properties in person.

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 for some positions. Certification is generally necessary for advancement to senior underwriter and underwriter manager positions.

Education

Most employers prefer to hire applicants who have a bachelor’s degree. Although a specific major is not required, some coursework in business, finance, economics, and mathematics is 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. Some companies offer training programs that include classroom instruction on the basics of underwriting.

As new underwriters gain experience, they work independently and handle more complex applications.

Licenses, Certifications, and Registrations

Employers often expect underwriters to become certified through coursework. These courses are important for keeping current with new insurance policies and for 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 2 years of insurance experience, The Institutes offer the Chartered Property and Casualty Underwriter (CPCU) designation. For beginning underwriters, The Institutes offer a training program.

The Institutes also offer several other designations in insurance specialties, including the Associate in Commercial Underwriting (AU) and Associate in Personal Insurance (API). To earn these designations, underwriters complete a series of courses and exams that generally takes 1 to 2 years.

The National Association of Insurance and Financial Advisors offers the Life Underwriter Training Council Fellow (LUTCF) designation, which consists of a three-part curriculum in basic insurance concepts.

The American College of Financial Services offers the Chartered Life Underwriter (CLU) certification. This certification consists of five core courses and three electives, and candidates must have 3 years of related work experience.

Important Qualities

Analytical skills. Underwriters must be able to evaluate information from a variety of sources and solve complex problems.

Decisionmaking skills. The core function of an underwriter is making decisions, such as whether to offer insurance coverage and at what level to set premiums.

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

The median annual wage for insurance underwriters was $69,380 in May 2018. 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 $42,260, and the highest 10 percent earned more than $122,840.

In May 2018, the median annual wages for insurance underwriters in the top industries in which they worked were as follows:

Most underwriters work full time.

Job Outlook About this section

Employment of insurance underwriters is projected to decline 5 percent from 2016 to 2026. Automated underwriting software allows workers to process applications more quickly than before, reducing the need for as many underwriters. As this technology improves and becomes more widely adopted in the insurance industry, more underwriting decisions will likely be made automatically.

However, there still will be a need for underwriters to review and update the criteria that run the automation. In addition, their analytical insight will still be needed in complex or specific insurance fields, such as workers’ compensation or marine insurance.

Demand for health insurance is also expected to increase and the health insurance industry is projected to grow faster than other insurance industry segments. Insurance underwriters working in health insurance are therefore likely to see stronger employment growth over the coming decade. Employment of insurance underwriters in the direct health and medical insurance carriers industry is projected to grow 15 percent from 2016 to 2026.

Job Prospects

Job opportunities should be best for those with a background in finance and strong computer and analytical skills.

Employment projections data for insurance underwriters, 2016-26

Occupational Title	SOC Code	Employment, 2016	Projected Employment, 2026	Change, 2016-26		Employment by Industry
				Percent	Numeric
SOURCE: U.S. Bureau of Labor Statistics, Employment Projections program
Insurance underwriters	13-2053	104,100	98,600	-5	-5,400	xlsx

State & Area Data About this section

Occupational Employment Statistics (OES)

The Occupational Employment Statistics (OES) program produces employment and wage estimates annually for over 800 occupations. These estimates are available for the nation as a whole, for individual states, and for metropolitan and nonmetropolitan areas. The link(s) below go to OES data maps for employment and wages by state and area.

• Insurance underwriters

Projections Central

Occupational employment projections are developed for all states by Labor Market Information (LMI) or individual state Employment Projections offices. All state projections data are available at www.projectionscentral.com. Information on this site allows projected employment growth for an occupation to be compared among states or to be compared within one state. In addition, states may produce projections for areas; there are links to each state’s websites where these data may be retrieved.

CareerOneStop

CareerOneStop includes hundreds of occupational profiles with data available by state and metro area. There are links in the left-hand side menu to compare occupational employment by state and occupational wages by local area or metro area. There is also a salary info tool to search for wages by zip code.

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

The Institutes

The American College of Financial Services

National Association of Insurance and Financial Advisors

O*NET

Insurance Underwriters