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If you are considering a career in the insurance industry or simply want to find out what an underwriter does, you have come to the right place. This article describes the important contributions these professionals make to the insurance system. We’ll also cover what it takes to become one and how this job is different from other roles in the industry.
An underwriter is an industry professional tasked with determining whether an insurance company can provide coverage to an individual, family, or business by evaluating the risks involved in insurance. Underwriters work closely with other insurance professionals such as actuaries, brokers and risk managers to ensure that insurers offer competitive rates to attract and retain customers and maintain profitability. Figure out a way to balance that.
An insurance company typically specializes in one insurance product. The most common are:
- Non-life insurance – Including home, auto, pet insurance and travel insurance
- Life insurance – Evaluate premiums for death benefits.May include disability and critical illness insurance
- Health insurance – Assess the cost of various health plans, including those not under the Affordable Care Act (ACA).
- commercial insurance – Covers business-related policies
- Reinsurance – When sharing part of the risk with another insurer
An underwriter’s primary role is to assess a client’s risk exposure to determine if it can be accepted for insurance, but its role goes beyond this.
The Bureau of Labor Statistics (BLS) lists several duties and responsibilities that underwriters must perform. These include:
- Analyze the information each customer provides on their insurance application
- Determining the risks involved in insuring a client or the likelihood that a client will make a claim
- Applicants are screened based on established criteria, such as age, credit rating, driving history, gender and health status, which vary by insurance product.
- Use automated software to determine risk to insure applicants and review recommendations from these platforms
- Contacting field personnel, medical personnel, and other relevant sources to obtain additional information about the client
- Determination of appropriate premium amount and coverage conditions
- Ensure premium competitiveness and maintain account profitability
- Maintain detailed and accurate records of insurance policies written and decisions made
Insurance companies often prefer candidates with bachelor’s degrees to fill underwriter vacancies. However, most insurance companies will consider someone with extensive insurance-related work experience, even if they only have an associate’s degree or a high school diploma. Similarly, insurance-related qualifications help candidates land jobs.
The standard qualifications that insurers look for when looking for potential underwriters are:
Insurance underwriting education
A Bachelor’s degree in Mathematical Science, Business, Economics, Finance, or Mathematics provides a solid foundation for those seeking to launch a career as an insurance underwriter. You can also take insurance underwriting courses and other related programs at accredited universities. Some universities offer master’s degrees in insurance risk management. This opens up opportunities for career advancement.
Insurance underwriting training
Entry-level underwriters typically work for a period of time (usually 12 months) under the supervision of a senior insurance writer, allowing them to perform their role with minimal instruction. Some insurers offer training programs to help new hires excel on the job.
Underwriting qualification
Underwriters are expected to obtain certification as they progress in their careers, especially if they aspire to senior underwriter roles or underwriting management positions. Each line offers a range of underwriting certificates to keep insurance professionals up to date on new products, regulatory changes and the latest innovations.
Below are some examples of certifications that can help underwriters advance their careers.
Chartered General Insurance Company (CPCU) Accreditation
Designed for professionals with two or more years of underwriting experience, it consists of four core courses, three intensive courses, one elective course and an ethics course. Underwriters must also pass an exam to become certified.
Chartered Life Underwriter (CLU) Accreditation
Offered by the American College of Financial Systems, this 18-month program is designed for those with three or more years of experience in the insurance industry. The curriculum consists of 5 core courses and his 3 elective courses covering a variety of topics for life insurance professionals such as:
- life insurance plans
- Life insurance law
- real estate planning
- Plans for Business Owners and Professionals
Similarly, candidates must pass a test to obtain a certificate.
Life Underwriter Training Council Fellow (LUTCF) Certification:
This three-course program covers the fundamentals of life insurance, risk management, investment products and practice management. It is provided by the National Association of Insurance Financial Advisers (NAIFA). Candidates must pass an exam to obtain certification.
Underwriters who specialize in health insurance can complete the American College Registered Health Underwriter (RHU) certification. Business underwriters, on the other hand, can obtain a Commercial Underwriting (AU) Accredited Associate from the American Insurance Association.
The five most important skills an underwriter should possess to excel in the role are:
- Analytical Capabilities: Ability to assess large amounts of information and accurately balance risk and caution.
- Decision making skills: Ability to sift through a variety of factors to determine whether an applicant should be approved for coverage, and if so, how much the premium will be and what the terms of the coverage are.
- Attention to detail: Ability to stay focused when reviewing insurance claims, as each item impacts coverage decisions.
- Interpersonal and communication skills: Ability to relate and communicate with others, as this job involves interacting with clients and other industry professionals.
- Math Skills: Good calculation skills as a role also include many calculations for determining insurance premiums and potential losses.
Most underwriters work full time in the offices of the following companies and organizations.
- A major insurance company that handles a wide range of insurance products
- A small insurance company that specializes in one type of coverage
- life insurance company
- reinsurance company
- health insurance company
- Banks and other financial institutions
- credit institution
According to the latest BLS data, the median annual revenue for US-based insurers is $76,390, with the lowest 10% earning less than $47,330 and the top 10% earning more than $126,380.
These are the top five industries with the highest average salaries for underwriters.
Here are the salary ranges for underwriters at different levels in the UK:
In Canada, the average underwriter salary is CA$62,500 per year, or CA$32.05 per hour. Entry-level salaries start at $48,750 per year, but most experienced workers can earn up to CA$96,412 per year.
Find out which insurance jobs pay the highest in our latest rankings.
Both underwriters and insurance brokers play an important role in the insurance industry, helping customers access different types of insurance. However, these professionals perform very different duties.
As previously mentioned, underwriters work for insurance companies to assess the risks posed by potential customers and determine whether insurance coverage can be approved. Underwriters use a variety of metrics to determine premium pricing and coverage terms, keeping in mind a company’s ability to maintain profits.
On the other hand, the insurance broker’s main role is that of an intermediary. They act as an intermediary between the purchaser and the insurer and aim to help individuals and businesses find insurance that meets their unique needs. or as part of an insurance brokerage firm.
So while underwriters put the interests of the insurer first, insurance brokers serve their customers and help them find coverage that fits their needs and budget.
Do you think becoming an insurance broker is a better fit for you? Check out this article to learn more about what it takes to become a successful insurance broker.
Insurance underwriting is a rewarding career. Underwriters are under constant pressure to attract and retain customers while maintaining insurer profitability. These two goals are often at odds, especially in highly competitive markets. However, with the right mix of technical and soft skills, an industry professional can excel in this role.
The table below shows the various attributes an underwriter needs to be successful in this space.
If you don’t like working for an insurance company and want to start your own insurance company, this handy guide will help.
Do you think being an insurance underwriter is a good career option? Tell us why in the comments section below.
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