Because insurance companies assume millions of dollars in risks by transferring the chance of loss from their policyholders to themselves, they employ underwriters to study and select the risks the company will insure. Underwriters analyze insurance applications, medical reports, actuarial studies, and other material. They must use personal judgment in making decisions that could cause their company to lose business or competitors (if they are too conservative) or to pay too many claims (if they are too liberal).
Most underwriters specialize in one of the three basic types of insurance: life, property-liability, or health. Property-liability underwriters also specialize by type of risk: fire, automobile, or workers' compensation, for example. Underwriters correspond with policyholders, insurance agents, and insurance office managers. They sometimes accompany salespeople as they call on customers and may attend meetings with union representatives or union members to explain the provisions of group policies.
Underwriters who specialize in commercial underwriting often evaluate a firm's entire operation before approving its application for insurance. The growing trend toward package underwriting of various types of risks under a single policy requires that the underwriter be familiar with several different lines of insurance, rather than be specialized in just one line.
Beginners work under the close supervision of an experienced under-writer. They progress from evaluating routine applications to handling those that are more complex and have greater face value.
Places of Employment and Working Conditions
Most underwriters are employed in the home offices of their companies, which are usually located in and around Boston, Chicago, Dallas, Hartford, New York City, Philadelphia, and San Francisco. Some are also employed in regional offices in other parts of the country.
Underwriting is basically a desk job. The average workweek is 37 hours with occasional overtime required.
Qualifications, Education, and Training
A career as an underwriter can be very satisfying to someone who likes to work with details and who enjoys relating and evaluating information. Underwriters must be able to make decisions and be able to communicate well. They must often be both imaginative and aggressive when searching out information from outside sources.
High school courses in mathematics are valuable.
Some small insurance companies will hire underwriter trainees without a college degree. Large insurance companies require a college degree, preferably in liberal arts or business administration.
As in all jobs in the insurance industry, great emphasis is placed on the completion of independent study programs throughout an employee's career. Salary increases and tuition costs are often provided by the company on completion of a course. The study programs are available through a number of insurance organizations and professional societies.
Potential and Advancement
According to the Bureau of Labor Statistics, the field is expected to shrink by 11 percent between 2014 and 2024, indicating poor job and advancement opportunities.
Income
Those working in commercial insurance lines generally have higher salaries than their counterparts working in personal lines. The Bureau of Labor Statistics estimates that the median annual salary for underwriters, as of 2015, is $65,040.
Most insurance companies have liberal employee benefits including life and health insurance and retirement pensions. Paid holidays are more numerous than in most other industries, and vacation policies are generous.
Additional Sources of Information
- Alliance of American Insurers
- American Council of Life Insurance
- Insurance Information Institute
- The National Association of Independent Insurers Public Relations Department
Related Jobs
Related jobs include actuary, claim representative, and insurance agent and broker.
