All You Need to Know Regarding Insurance Underwriter Jobs

TLTR: This article explores insurance underwriter jobs. Learn what this career path involves and how you can land a spot in this rewarding field.

As per Deloitte, the insurance industry managed to quickly adapt to the pandemic. They relied on remote access and connectivity to the carriers and their policy holders. In fact, the industry is seeing global growth of 3% in 2021 after a 1% decline in premiums over 2020. The fact is, people and businesses are always going to need insurance.

With all that in mind, it’s easy to see why insurance as career looks quite appealing to many people. There are many positions available in the industry. Let’s look at one of these career opportunities.

What is an Insurance Underwriter?

The core principle of insurance is to help financially protect people in the event of a wide range of adverse circumstances. Insurance professionals therefore analyze the potential risks individuals and businesses have to face. They provide relevant services to clients based on these risks.

That’s where insurance underwriters come in.

Insurance underwriters evaluate insurance applications and premiums. They’re the ones who determine the risks, insurance terms, and coverage amount for an insurance applicant. Today’s underwriters utilize computer software to determine whether an applicant should be approved or not.

Most insurance underwriters work in commercial lines of insurance such as property, automobile, general liability, business interruption, director’s and officer’s, inland marine, life, health, and disability insurance. But they can also find employment in specialty markets as well. Some examples are: marine, aviation, surety (bonds), and agriculture (crop damage).

Some insurance underwriters work at a desk evaluating insurance applications, while others travel from client to client, meeting with potential policy buyers. Insurance underwriters must be able to think logically because their decisions have a direct impact on their company’s profits. If an underwriter approves an insurance policy that’s too risky for the insurer to bear, the company could take a significant loss for every client who makes a claim on that policy.

All in all, for the right person, an underwriter job can provide a great boost to your insurance career, given the variety of work and growth potential.

Note: Underwriters who write business by hand generally develop better comprehension of what they are doing than those who rely on computers.

What is Underwriting?

Insurance underwriting is a very common position among financial services occupations. According to III, in 2020, the net premiums written in property and casualty (P&C) lines totaled $652.8 billion. P&C insurance primarily consists of car insurance, homeowners insurance, and commercial insurance.

Risk is the most important factor to consider in underwriting. Based on the potential risks, there are three types of underwriting in the insurance industry: insurance, loans, and securities.

Underwriting for Insurance
In the case of insurance underwriting, the primary focus is on policyholders. This type of underwriting will assess the risk of insuring a policyholder for personal or commercial lines of insurance. It is done based on age, lifestyle, health, medical history, and so forth, for personal insurance. And location, business type, income sources, and more for commercial insurance.

Underwriting for Loans
Loan underwriting involves evaluating an applicant’s financial records, credit history, and the value of the offered collateral. The size and purpose of the loan is also part of the evaluation. In insurance, the most common type of loan underwriting is for mortgages. In this case, the underwriter appraises the applicant’s income, debt, savings, credit score, credit history, and any other relevant financial circumstances. This underwriting requires a timeframe of a week.

Underwriting for Securities
Securities underwriting mostly relates to the banking sector, specifically for an initial public offering (IPO). This type of underwriting is done on behalf of the investment bank to assess the potential risks and define the price of securities—for example, stocks. And based on this assessment, the bank can sell these securities.
Underwriting for securities can involve individual stocks or debts of corporate, municipal, or government bonds. Doing so ensures that the company’s IPO will bring the necessary capital and yield profits for underwriters.

Note: When multiple underwriters are involved in securities underwriting, it is known as an underwriter syndicate.

An insurance underwriter is responsible for making the important decision of approving a client’s insurance application and setting their premium amount. They must be meticulous and they need strong technical skills and understanding of the industry. With that in mind, companies set certain requirements while hiring applicants for insurance underwriter jobs. These include:

• State issued insurance license
• Strong computer skills
• Bachelor’s degree with risk management courses
• Good judgement and analytical skills
• Interpersonal and communication skills
• Eye for detail
• Decision-making skills

Underwriters must be able to evaluate different forms of property and casualty insurance that are available for consumers. It’s also important for them to understand laws and business practices in order to determine which type or combination of policies would best suit a customer’s needs.

When you begin your career as an underwriter, you will usually work under the supervision of a senior underwriter. Initially, you will learn common risk factors in the industry and also go through some company-certified training programs. These programs are essential to anyone looking for insurance underwriter jobs, as employers often expect underwriters to be certified. It’s necessary for climbing the ladder to positions of a senior underwriter or underwriting management.

Beginning underwriters can look into courses and training from the following certified organizations:

• The Institutes
• National Association of Insurance and Financial Advisors (NAIFA)
• The American College of Financial Services

As you gain the necessary knowledge and experience, you will work independently and advance your career as an insurance underwriter.

Note: Some employers can make concessions to insurance underwriter job applicants if they have sufficient insurance-related experience along with good computer skills.

Which Sectors Require Insurance Underwriter Jobs?

Underwriters can work for several different types of employers. Some common examples:

• Stock brokerages
• Insurance companies
• Banking institutions (Only licensed professionals able to sell stocks, insurance, and other financial products)

Other less conventional settings include managing an independent insurance agency where the employer only sells their own products to customers. Or being the second in command at a national agency that sells insurance for many major companies. Then there are also Managing General Agents (MGAs), a job that requires insurance underwriting ability since MGAs have the authority to underwrite from an insurer.

Underwriters may require different licenses depending on which type of work they choose to do. For example, those who sell property and casualty insurance must have a license from their state’s Insurance Department. It’s important to research the different license requirements to get a job as an insurance underwriter that suits your skills.

Some employers will only hire people who have passed the Series 7 exam and a state securities license. It’s not uncommon for an insurance underwriter to work in more than one position which requires different licenses over the course of their career.

Note: Series 7 is an examination focused on setting a competency level for insurance professionals or stockbrokers to work in the securities industry. It is administered by the Financial Industry Regulatory Authority (FINRA).

How Much Does an Insurance Underwriter Make?

Like many jobs within insurance sales, starting salaries are relatively low but have the potential for significant increases over time. Newly hired underwriters may not make much more than moderate money until they gain several years of experience. They can earn more once they move up to a position where they supervise others who evaluate applications and sell policies on a commission basis rather than a salary.
According to Payscale, in 2021, the annual median salary for an insurance underwriter was $58,021. Entry level underwriters made around $48,920 and the ones who were more experienced were earning $69,224 annually.

Insurance underwriters can also increase their income using supervisory or managerial skills. They can supervise insurance agents, adjusters, or other workers who produce the actual product for an insurance company.

The best way to get a promotion is through continuing one’s education and gaining work experience. Experience level plays an important role when calculating income. A common way for increasing income is to go from an individual contributor (salary) to manager (salary plus bonus).

Insurance Underwriter Jobs Outlook

According to Business Standard, the insurance industry is expected to grow at a rate of 7% to 9% in the fiscal year of 2022, as predicted by investment firm IRCA. This statistic does hint at the potential need for insurance professionals in the coming future.
Most insurance companies will require that applicants have at least a two-year degree in insurance or a related field as well as several years of experience before offering them entry-level positions. However, if you’re willing to start out at the bottom and work your way up, there is great job security in insurance underwriting jobs.

Unfortunately, according to the Bureau of Labor Statistics, the employment of insurance underwriters is projected to drop by 6% from 2019 to 2029. This is most likely due to automation of underwriting software that allows companies to process applications faster than before. With further development of this technology more underwriting decisions will require less human input.

But that doesn’t make the human element obsolete. Underwriters will still be essential to oversee the automation procedures.

In Conclusion

While looking for insurance underwriter jobs, you must have strong technical skills and understanding of the industry. Underwriters are responsible for making the important decision to approve an application. In order to do this successfully, you will need excellent judgement and analytical abilities as well as interpersonal and communication skills. These qualities will help you understand your client and company better and help you further advance your insurance career.

If you’re looking for an opportunity where your knowledge, experience in risk management or related field would make you shine, feel free to check out our insurance directory and learn from someone experienced!