Becoming an Underwriter

The term underwriter usually refers to an insurance underwriter, a financial professional who evaluates the potential risk of loss involved in insuring an individual or a business. The underwriter identifies and calculates this risk then establishes the appropriate premium rates and writes policies that cover this risk.

The occupation of insurance underwriter itself involves a substantial degree of risk, as an insurance company can lose business if it appraises risks too conservatively or too liberally. The underwriter evaluates and develops a coverage plan which attempts to ensure that neither the insurance company nor the individual are at loss.

Education, Training & Degrees for Underwriters

Most insurance companies prefer underwriters to possess at minimum of a bachelor's degree in business administration, finance, business law, or accounting. A master's degree in any of these areas is often preferred, as in a master of business administration (MBA).

A commitment to continuing education is crucial for underwriters who wish to advance their career. There are a numerous colleges that offer specialized courses specifically geared to the underwriting profession. Some even offer online courses, a convenient choice for insurance underwriters who are already employed and who wish to advance their career.

One first step in this continuing education is offered by the Insurance Institute of America (IIA), whose "Introduction to Underwriting" course delivers essentials of the trade. Following this course, the IIA offers a specialty designation, Associate in Commercial Underwriting (ACU). The ACU is a formal step toward a career underwriting business insurance policies. Those interested in developing a career underwriting personal insurance policies can earn the Associate in Personal Insurance (API) designation. To earn either the ACU or the API designation, underwriters complete a series of courses that usually last one to two years and are followed by a series of examinations.

The Chartered Property and Casualty Underwriter (CPCU) designation offered by The American Institute for Chartered Property Casualty Underwriters (AICPCU) is the final stage of development for an underwriter. To qualify, an individual must pass 10 exams and have acquired a minimum of three years of experience in the insurance industry. The exam covers such topics as risk management, insurance operations and regulations, business and insurance law, financial management and financial institutions.

The AICPCU also offers nearly two dozen additional insurance-related educational programs in conjunction with the Insurance Institute of America, including associate designation programs in claims underwriting, risk management, and reinsurance.

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Job Responsibilities and Desired Skills for Underwriters

The primary responsibilities of an insurance underwriter include, but are not limited to, examining documents to determine the degree of risk; declining insurance in case of excessive risk; contacting field representatives, medical personnel, and others to obtain further information relevant to the determination of risk; explaining company underwriting policies to applicants; and authorizing reinsurance of a policy when the risk is too high.

A career in underwriting is a good match for individuals who enjoy analyzing information and concentrating on details. To succeed as an insurance underwriter, one must have sound judgment and the ability to make good decisions. Other important capabilities include excellent communication and social skills, as an underwriter often communicates with agents and other insurance professionals, as well as individuals who are less trained in the intricate details of the tasks of underwriting and risk assessment. Computer skills are also essential, as computers constitute an integral part of most underwriters' jobs.

Underwriter Salary Range and Employment Outlook

According to the U.S. Department of Labor, employment prospects for underwriters are expected to be about average during the next decade in comparison with other occupations. Opportunities are expected to be better for those with a background in finance and strong computer and communication skills.

Figures released by the U.S. Bureau of Labor Statistics indicate that the average annual salary of insurance underwriters was $48,550 in 2004, with a range running from a low of less than $30,410 to a high of more than $86,110.