Pros and Cons of Insurance Underwriter Careers
Insurance underwriters calculate possible risks associated with providing insurance for potential policyholders. Read more to learn if an insurance underwriter career is the right one for you.
|PROS of an Insurance Underwriting Career|
|High average salary (median annual wage of about $64,000 as of May 2014)*|
|Pleasant working environment*|
|Varied day-to-day tasks keep the work day fresh*|
|Several specialization options (property and casualty, life, health and mortgage)*|
|Computers and the Internet make completing risk assessments quicker*|
|CONS of an Insurance Underwriting Career|
|Declining job market (projected employment decline of six percent from 2012-2022)*|
|Limited upward mobility*|
|Sedentary work environment*|
|Pressure to avoid taking too few or too many risks *|
Source: *U.S. Bureau of Labor Statistics.
Job Description and Duties
Insurance underwriters need to be comfortable working with computers. Underwriting technologies, known as 'smart systems,' help insurance underwriters quickly analyze risks of an insurance applicant and create premium rates based on that analysis. While the insurance industry is increasingly reliant on computer software to make it easier for underwriters to complete risk assessments and calculate rates, these automated systems do not remove the need for human skills. Insurance companies need people (not machines) to verify information and effectively communicate with potential customers and insurance agents.
As an insurance underwriter, you'll most likely choose to specialize in one of four main categories, including property and casualty, mortgage, life or health insurance. Property and casualty insurance is an umbrella term for automobile, homeowners, marine or fire insurance. Occasional travel may be needed to attend meetings.
Salary Info and Career Prospects
According to the U.S. Bureau of Labor Statistics (BLS), the 2014 median annual wage for insurance underwriters was about $64,000, although salaries ranged from around $39,000 to $113,000 (www.bls.gov). Some of the higher paying areas include large metropolitan cities, such as New York and Chicago.
The BLS has projected a six percent decrease in employment in the 2012-2022 decade. The decline is due to automated software that reduces the need for underwriters. It was predicted that applicants with experience in finance and those with strong computer skills will have the best choice of job opportunities. Additionally, you may face more competition, but better job prospects in heavily populated areas, particularly in East Coast areas, such as New York, Massachusetts, Connecticut, Delaware, Maryland and New Jersey.
What Are the Requirements of an Insurance Underwriter Career?
Although a large percentage of what you'll do as an underwriter can be learned during on-the-job training, most employers prefer applicants who have a bachelor's degree. Finance and business courses as well as economics and math classes are particularly beneficial to this career. You need to make solid decisions and pay attention to details to succeed in this job. Good judgment and excellent interpersonal skills will also help since you'll need to deal with a variety of other professionals, including agents and managers.
According to the BLS, strong communication, organization and analytical skills are important. Although previous experience is often preferred, applicants who are proficient in software such as Microsoft Excel or Word also have an edge. Other factors that can help you stand out include the following:
- Good decision-making skills
- Math skills
- College coursework in finance, business law and business administration
- Solid knowledge of insurance concepts and terminology
What Employers Are Looking For
Because insurance underwriters rely on computer programs to complete risk assessments, it's important to be comfortable working with computers. Additionally, insurance companies favor candidates with a bachelor's degree or a significant amount of related experience. Below are some examples of job postings open in February and March 2012:
- A nationwide mutual insurance company looked for an applicant with a bachelor's degree or equivalent experience who has completed or is enrolled in insurance courses offered by organizations such as Chartered Property and Casualty Underwriter (CPCU) or Insurance Institute of America (IIA). The underwriter will review insurance applications, evaluate each applicant's potential risk, provide customer service and train new underwriters.
- A nationwide property and casualty insurance company requested an underwriter with two to five years of experience to work on assigned applications received from independent insurance agencies. The company also extended the option for the right applicant to work from home.
- An Oklahoma-based worker's compensation insurance carrier was seeking a candidate with three years of business office experience or a combination of college coursework and experience to underwrite worker's compensation policies.
- A global insurance broker looked for a new member to join the underwriting team. Applicants with an associate's degree or higher, along with an Insurance 21, 22 and 23 either completed or in process, were preferred. Underwriters set up loss history, review endorsements, review and underwrite lines of coverage and update program databases. Other job duties include sending out proposals, processing non-renewal notices and requesting worker's compensation re-rates.
How Can I Stand Out?
Although not necessarily a requirement, the BLS reports that employers often have the expectation that underwriters will get certified. Add a credential to your resume by taking a course to become designated in a specialty offered by professional organizations such as the CPCU and IIA. Two such specialty designations are the Associate in Commercial Underwriting (ACU) and the Associate in Personal Insurance (API). Each of these certifications takes approximately one to two years to complete and requires passing a number of courses and exams.
Designations show employers that you have a thorough, specialized knowledge base and essential training in ethics and professional conduct. Furthermore, certification is a good way to stay up to date with new technology and changes in the law and may be necessary for advancement to senior and management positions.
Other Careers to Consider
After reading about the job of an insurance underwriter, perhaps you've decided that you'd rather do something a little less stressful that also allows you to get outside the office, but still remain in the industry. If that's the case, you might consider becoming a claims adjustor. Claims adjusters investigate claims, review police or hospital records and inspect property or automobile damage. All of the information you gather is compiled in the claim's report.
According to the BLS, the 2011 median annual wage for claims adjustors was about $59,000, and job prospects were projected to grow by three percent from 2010-2020 (www.bls.gov). A high school diploma may be sufficient for an entry-level position, although some employers prefer applicants with bachelor's degrees or previous experience. Some states may require adjusters to become licensed, while others allow you to work under the company license.
Insurance Sales Agent
If you like working with people and have a knack for sales, you may enjoy working as an insurance sales agent. Agents offer insurance policies for one or more kinds of insurance. College graduates are usually preferred. States require that insurance sales agents pass a pre-licensing course, pass all state-mandated tests and complete continuing education requirements to renew the license every two years.
According to the BLS, the 2011 median annual wage was around $47,000, although salaries ranged from $26,000 to $115,000 (www.bls.gov). Job growth was projected to be faster than the average for all occupations at 22% between 2010-2020.