Pros and Cons of Becoming a Commercial Underwriter
A commercial underwriter makes decisions regarding commercial property and liability policy risk assessment. To determine whether this career is right for you, take a look at the pros and cons listed below.
| Pros of a Commercial Underwriting Career |
|---|
| Various specialties within the insurance field, such as health or automotive insurance* |
| Bachelor's degree is the only entry-level requirement* |
| Work in comfortable offices* |
| Cons of a Commercial Underwriting Career |
|---|
| Low-growth field (-11% growth from 2014-2024)* |
| Automated underwriting software is reducing the need for underwriters* |
| Low pay (the lowest-paid 10% in this field earned less than $39,000 annually in 2014)* |
Source: *U.S. Bureau of Labor Statistics
Essential Career Information
Job Description and Duties
Commercial underwriters ultimately evaluate risk. As a commercial underwriter, you would collect information from reputable sources, such as medical personnel or field representatives, to evaluate and manage degrees of risk involved with an insurance policy. Duties might include predicting losses and their probability, authorizing reinsurance for high-risk ventures and choosing whether or not to offer insurance for certain projects. You may need to consult credit scores or medical records in order to make well-informed decisions. Most underwriters specialize in mortgage, property and casualty, health or life insurance. Typically, commercial underwriters specialize in property and casualty insurance.
Salary Info
According to the U.S. Bureau of Labor Statistics (BLS), the employment outlook for all types of insurance underwriters was expected to grow at a rate slower than the national average from 2014-2024 (www.bls.gov). Candidates who have a strong background in computer and communication skills will have a better chance of securing a position than those who do not. Insurance companies may decrease their hiring of underwriters because of recent innovations in automated software. New opportunities may exist for underwriters, however, due to a need to replace workers who retire or transfer to new occupations. The median annual salary of an insurance underwriter in general, as of May 2014, was roughly $64,000. The top-earning 10% in this field earned an annual wage of approximately $113,000.
What Are the Requirements?
Since commercial underwriting is a specialized area of general insurance underwriting, a number of degree programs that can potentially prepare you for this career path. Most large-scale corporations require that candidates have, at minimum, a bachelor's degree in business administration, finance or accounting. A commercial underwriter is required to have strong problem-solving ability and be able to make decisions regarding company policy in a timely and efficient manner. Other requirements include being able to communicate effectively with colleagues, orally and in writing. In addition, commercial underwriters need strong analytical and decision-making skills in order to solve complex issues dealing with risk management.
What Employers Are Looking For
When employers advertise for commercial underwriters, they typically seek out candidates with several years of relevant work experience in commercial insurance. In addition, many companies prefer to hire commercial underwriters who have earned certification in this field. Here are examples of what some real employers looked for during March 2012:
- An insurance company based in Illinois advertised for a commercial underwriter with at least a bachelor's degree and Chartered Property and Casualty Underwriter (CPCU) certification. In addition, the company listed experience with policy level and agency audits. Knowledge of rating plans, state requirements and coverages were required.
- A insurance company based in Florida advertised for a commercial underwriter with at least an associate's degree (or equivalent experience) and two years of work experience; however, the company preferred candidates with a bachelor's degree. In addition, the company preferred candidates who already possessed certification through the Insurance Institute of America (IIA).
- A banking and financial services company based in California advertised for a commercial underwriter with a bachelor's degree in finance, accounting or business administration. In addition, the company preferred candidates possessing proven experience with smaller commercial lending environments. Candidates also needed knowledge of commercial financial statements and portfolio management.
How to Make Your Skills Stand Out
While commercial underwriters have limited education requirements to gain entry-level employment, they still must undergo considerable on-the-job training under the supervision of experienced underwriters. Moreover, many companies require that commercial underwriters complete skills-related coursework through training programs, such as those offered through the IIA. You could earn two designations through the IIA: the Associate in Personal Insurance (API) and the Associate in Commercial Underwriting (AU).
Another training program is available through The American College. You can become a Life Underwriter Training Fellow (LUTCF), or earn the designations of either a Chartered Life Underwriter (CLU) or a Registered Health Underwriter (RHU). After working in the field as an underwriter for at least three years, you may then attempt to earn the CPCU certification through the American Institute for Chartered Property Casualty Underwriters. The more education and certifications you earn in this field, the better your job prospects could be.
Alternative Career Paths
Actuary
If you're interested in a career with greater job growth prospects than that of commercial underwriter and you'd like to analyze the financial costs of risk, you might consider a career as an actuary. According to the BLS, actuaries in 2011 earned a median salary of roughly $91,000. In addition, this field was expected to grow by 27% from 2010-2020. Similar to commercial underwriting positions, you would generally need only a bachelor's degree to enter this field.
Budget Analyst
If, instead of dealing with probabilities, you'd rather help governments and companies formulate budgets and comply with financial regulations, you might work as a budget analyst. The role of a budget analyst is to prepare budget reports for both public and private institutions in order to monitor spending. The median pay for this career was approximately $69,000 as of May 2011. Employment was expected to grow by 10% from 2010-2020.
Insurance Sales Agent
You might consider becoming an insurance sales agent if you enjoy working directly with clients. The median pay for this career path was roughly $47,000 annually as of May 2011. Employment was expected to grow by 22% from 2010-2020. As an insurance agent, you would be expected to sell clients insurance policies rather than analyze the risks.
