How to become an Insurance Underwriter
There really is no formal education required to become an underwriter however many companies prefer candidates to have a bachelor's degree or professional designation. Also some insurance related experience and strong computer skills are desirable. Most of the knowledge required to be an underwriter may be learned on through on the job training. Therefore the majority of underwriters start their jobs as trainees.
What does an Insurance Underwriter do?
The function of insurance companies is to protect organizations and individuals from financial loss as a result of unforeseen circumstances. They do this by assuming billions of dollars of risk each year. These risks include such things as car accidents, property damage and illness. An insurance underwriter decides whether or not insurance is provided and under what terms. Underwriters are needed to calculate and identify the risk of loss for policyholders; they also establish who receives a policy. Further, they determine an adequate premium and write policies that cover this risk. There is a fine line since the insurance company might lose customers to a competitor if the underwriter appraises risks too conservatively. Conversely if the underwriter is too liberal then the insurance company could end up paying excessive claims.
Using their computers the underwriters analyze information in the insurance applications to determine if the risk is acceptable. Their primary job is to make sure that it will not result in a large loss for the insurance companies. There are often reports that supplement the applications for insurance. These reports contain loss control representatives' data, medical records, reports from data vendors and actual studies. The underwriters must then determine whether or not to issue the policy and to determine the appropriate premium to charge when a policy is issued.
What skills or qualities do I need to become an Insurance Underwriter?
Most large insurance companies prefer college graduates who have a degree in business administration, or other respected financial courses, for entry level underwriting positions. A bachelor's degree in almost any field with courses in business law and accounting provide a good general educational background. Some course work in computers is also desirable due to the fact that computers are now such an integral part of the job.
More often than not new employees will start as underwriter trainees or assistant underwriters. Their job is usually to collect information on applications and evaluate routine applications with supervision from an experienced risk analyst. They may also be assigned to studying case files to become familiar with factors associated with certain types of losses. Some of the larger insurers do offer work study training programs. With the more experience the trainee gains they are assigned policy applications that are more complex.
Other qualifications include people who enjoy analyzing information and paying attention to detail. An underwriter must possess good judgment so they can make sound decisions. It is imperative that underwriters have good communications and interpersonal skills. This is because much of the underwriter's work involves dealing with agents and other insurance professionals.
In order to advance in his career the underwriter will have to receive continuing education. There are independent study programs available for experienced underwriters. For underwriter training programs check with the Insurance Instituted of America. It also offers an Associate qualification in
a Commercial Underwriters program. If you prefer you can also obtain an Associate in Personal Insurance designation. To earn either of these associate designations underwriters must complete a series of courses and examinations that will generally last between 1 and 2 years.
How much does an Insurance Underwriter make?
The yearly median earnings of wage and salary insurance underwriters were $52,350 in May 2006. The annual earnings for the middle 50 percent were between $40,000 and $71,070 a year. The lowest 10 percent of underwriters earned less than $32,270 per year. While the upper 10 percent earned in excess of $92,240. Underwriters working for insurance carriers earned an annual median of $52,900 and those working for agencies, brokerages and other insurance related activities earned an annual median of $51,820.
There are usually better than average benefits offered by insurance companies, which often include retirement plans and employee financed group life insurance. Many insurance companies will also pay tuition for underwriting courses for their trainees and some offer salary incentives for more study.
Who are some influential professionals in this field?
Solomon Huebner is called the "father of insurance education." Huebner taught the first class ever given on the subject of insurance. He also established the insurance department and became the architect of the modern financial services industry.
Huebner quickly realized the need for uniformity, fairness and honesty in the insurance industry. He also wrote some pioneering texts on various types of insurance. These included life, property and marine. He also stressed the importance of honesty, professionalism and the quest for expert knowledge.
What are some leading organizations in this field?
There are a few noteworthy organizations. One is the American Institute for Chartered Property Casualty Underwriters. They award the Charter Property and Casualty Underwriter CPCU designation. To gain this designation the underwriter must pass 8 examinations and have at least 3 years of insurance experience. They must further abide by the Institute's and the CPCU Society's code of professional ethics.
There is also the American College that offers the equivalent Charter Life Underwriter CLU designation. They also offer the Registered Health Underwriter for life and health insurance professionals.
What are the top cities for Insurance Underwriter jobs?
There were approximately 104,000 insurance underwriting jobs in 2006. About 65 percent of all underwriters were employed by insurance carriers. The remaining 35 percent were mostly working in insurance agencies or for organizations that offer insurance services to agencies that are owned and operated by banks, mortgage companies and real estate agencies.
The leading city for insurance underwriters was New York City, NY. A distant second was Chicago, IL and Los Angeles, CA came in third. Dallas, TX and Atlanta, GA were close fourth and fifth.
Those with experience in fields relating to insurance will have the most job opportunities. Others with a background in finance with strong computer and communications skills will also find the job market more favorable.
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