Career Development

What Does an Underwriter Do?

Find out what an underwriter does, how to get this job, and what it takes to succeed as an underwriter.

Underwriters are financial professionals who help determine the price of insurance policies. They analyze risk and assess the likelihood that a policyholder will make a claim on their coverage. This information is used to set the premium rate for each policy, which is then offered for sale to potential customers.

Underwriters must be able to quickly evaluate large amounts of data in order to make these decisions. They may also need to interact with clients directly to explain how certain policies work or answer questions about coverage details.

Underwriter Job Duties

An underwriter typically has a wide range of responsibilities, which can include:

  • Reviewing insurance contracts for accuracy and completeness of information
  • Providing assistance to customers regarding policy terms, options available for coverage, renewals, claims handling, and other issues related to their policies
  • Explaining the terms of an insurance policy and answering questions about coverage
  • Negotiating with agents, brokers, and company representatives to make sure that the terms of a policy meet the client’s needs and that the premium is affordable
  • Evaluating risk by analyzing statistical data provided by insurance companies to determine premium rates
  • Reviewing applications for coverage to ensure that they are complete and accurate, and approving them for further processing
  • Interviewing insured individuals or businesses to learn about their personal or commercial insurance needs
  • Reviewing the financial condition of an applicant to determine if they are eligible for coverage
  • Recommending coverage limits, deductibles, and other terms based on the applicant’s needs and budget

Underwriter Salary & Outlook

Underwriters’ salaries vary depending on their level of education, years of experience, and the company size and industry. They may also earn additional compensation in the form of bonuses.

  • Median Annual Salary: $66,500 ($31.97/hour)
  • Top 10% Annual Salary: $145,000 ($69.71/hour)

The employment of underwriters is expected to decline over the next decade.

Employment growth will be limited by automation, which should increase productivity and reduce the need for underwriters. Automation allows underwriters to evaluate more applications than previously possible, increasing the productivity of each worker.

Related: In-Depth Underwriter Salary Guide

Underwriter Job Requirements

To become an underwriter, you may need to have the following:

Education: Most underwriters have at least a bachelor’s degree in finance, accounting or business. Underwriters who want to specialize in a certain industry may also have a degree in the field they want to underwrite.

Training & Experience: Most underwriters receive on-the-job training in their first few months with a company. This training helps the underwriter learn the specific procedures and guidelines of the company. It also helps the underwriter learn the computer systems and software the company uses.

Certifications & Licenses: Though you don’t need a certification to become an underwriter, earning one can demonstrate your dedication to your role and expand job opportunities available to you.

Underwriter Skills

Underwriters need the following skills in order to be successful:

Technical knowledge: Underwriters often have a strong understanding of the financial industry and the products they’re evaluating. This can help them make informed decisions about the risks associated with a loan. They may also have a background in mathematics, which can help them understand the calculations involved in the loan process.

Communication skills: Underwriters communicate with many people throughout the mortgage process, including clients, other underwriters, lenders and other professionals. They use verbal and written communication skills to explain the mortgage process, answer questions and provide information. They also use communication skills to negotiate with lenders and clients to ensure everyone is on the same page.

Analytical skills: Analytical skills can help underwriters make informed decisions about the risks associated with a loan. They can use analytical skills to evaluate the financial health of a business and determine if the business can repay the loan. They can also use analytical skills to assess the risks of a property and determine if the property is a good investment.

Problem-solving skills: Underwriters solve problems by finding solutions to the risks associated with a loan. They use their problem-solving skills to find ways to make a loan more secure and reduce the risk of default. For example, an underwriter might suggest a lender change the terms of a loan to make it more appealing to the borrower. This reduces the risk of default and makes the loan more secure.

Teamwork skills: Underwriters often work with other professionals, such as insurance agents, to complete their work. Having strong teamwork skills can help you collaborate with others and complete projects efficiently. You may also work with clients to explain policies and answer questions.

Underwriter Work Environment

Underwriters work in offices, usually in cubicles, and have regular business hours. They may occasionally travel to meet with clients or to attend conferences. The work can be stressful because of the need to make quick decisions and the potential for large financial losses if a policyholder defaults on a loan. Underwriters must have excellent analytical and communication skills and be able to work well under pressure.

Underwriter Trends

Here are three trends influencing how underwriters work. Underwriters will need to stay up-to-date on these developments to keep their skills relevant and maintain a competitive advantage in the workplace.

The Growth of Cyber Insurance

The growth of cyber insurance is a trend that is quickly gaining popularity among businesses and individuals. This is due to the increasing number of cyber attacks that are occurring each year, which can result in significant financial losses for those who are not protected.

As more businesses begin to realize the importance of cyber insurance, underwriters will need to develop expertise in this area. They will need to be able to assess the risks that businesses face and create policies that are tailored to their needs. In addition, they will need to be able to educate businesses about how to protect themselves from cyber attacks.

More Focus on Data Security

As data security becomes an increasingly important issue, insurers will focus more on professionals who can help them manage it. This means that underwriters will need to have a strong understanding of data security and how to protect it.

In order to stay ahead of the curve, underwriters should keep up with the latest developments in data security technology and learn how to implement it in their own companies. They should also be familiar with the latest threats and how to mitigate them.

Greater Use of Artificial Intelligence (AI)

Artificial intelligence is becoming increasingly popular in the insurance industry as a way to automate tasks that were once done by human underwriters. This has led to a greater use of AI in underwriting decisions, which has resulted in a need for underwriters who are comfortable working with this technology.

As artificial intelligence becomes more prevalent in the insurance industry, underwriters will need to learn how to work with it in order to make sure that claims are being processed accurately. They will also need to be able to explain the benefits of using AI to customers and stakeholders.

How to Become an Underwriter

An underwriter career path can be a great way to start your financial services career. As an underwriter, you’ll work with insurance companies to assess the risk of insuring certain types of businesses or individuals. This means that you’ll need to have a strong understanding of the industry and its regulations.

To become an underwriter, you’ll typically need a degree in business administration or finance. You may also want to take additional courses in insurance or risk management. Additionally, many companies require underwriters to pass certification exams.

Related: How to Write an Underwriter Resume

Advancement Prospects

There are many ways to advance your career as an underwriter. One way is to specialize in a particular type of insurance, such as life, health, or property and casualty. Another way to advance is to move into a management position, such as assistant manager, manager, or director. You could also move into a different area of the insurance industry, such as sales, marketing, or customer service. Or you could start your own insurance agency. With experience, you could also become a certified insurance counselor or a certified insurance consultant.

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