Pros and Cons of Becoming an Underwriter
Underwriters determine the amount of risk associated with offering a particular service to a client and gauge the potential credit worthiness based off of the assessment. Check out the pros and cons to see if an underwriting career is right for you.
| Pros of Becoming an Underwriter |
|---|
| Good earning potential (insurance underwriters earned an average salary of about $70,570)* |
| Multiple specialties to choose from (insurance, investments, mortgage)* |
| Variety of work activities (talking to clients, analyzing risks, creating solutions for debt problems)** |
| Work is done in a comfortable office* |
| Cons of Becoming an Underwriter |
|---|
| Declining job growth (projected -6% change in jobs for insurance underwriters between 2012 and 2022)* |
| Bachelor's degree often required** |
| Pressure to avoid too much risk and still generate a profit* |
| Significant amount of time sitting in front of a computer (could lead to back strains, carpal tunnel)** |
Sources: *U.S. Bureau of Labor Statistics, **O*NET Online.
Essential Career Information
Regardless of which area of underwriting you work in, you'll usually use software packages to assess the risks of a loan or an insurance policy. Most underwriters interact with clients and supervisors on a regular basis, so you should be comfortable with talking to different people throughout the day. Underwriters usually have solid math skills, since they interpret numerical data to make risk assessments.
Specializations
Underwriters have the luxury of choosing a specialty to pursue. If you specialize in insurance underwriting, you'll determine what insurance coverage can be offered to a potential customer by assessing the risks associated with the policy. You can even work in a sub-specialty within the insurance underwriting industry; some of the common ones include life insurance, health insurance and property insurance. Investment underwriters work with clients to negotiate deals and restructure debts. You'll spend a fair amount of your time working with your clients, but a portion of your time is spent figuring out remedies to financial problems. Mortgage underwriters determine how much risk is involved with providing a loan to a potential client while maximizing profit potential. As a mortgage underwriter, you'll review credit history reports, bank statements and other financial documents to determine if a loan should be offered to a customer.
Job Outlook and Salary
Employment growth for insurance underwriters was projected to decline -6% from 2012-2022, according to the U.S. Bureau of Labor Statistics (BLS). With the increasing use of automated underwriting software in processing applications, the industry has less need for underwriters. However, employers still need human eyes to verify the accuracy of automated decisions, so some demand for underwriters will remain. The BLS predicted that health insurance underwriters should have decent job opportunities, since this underwriting specialty should have faster growth than other ones.
As of May 2014, the BLS reported that insurance underwriters earned an average salary of about $70,570. Loan officers, including loan underwriters, earned a median annual income of roughly $73,670 in 2014. Financial specialists (this category includes investment underwriters) earned a mean salary of approximately $71,230 in 2014, according to the BLS.
What Are the Requirements?
For entry-level positions in insurance underwriting, you'll most likely start in a trainee role assisting senior underwriters. Having relevant work experience may be enough to land you a job in insurance underwriting, but most employers want applicants who have a bachelor's degree. Your undergraduate education should include some courses in math, economics and finance. Certification may be expected from some employers and is usually needed to advance to higher positions. The specific certification that would be best for you depends on which industry you work in and what your employer would prefer you to have.
Job Postings from Real Employers
Actual job postings show that some employers require a bachelor's degree for insurance underwriters, while a high school diploma and equivalent experience may be acceptable for other underwriters. Industry experience is often necessary, and typically ranges from 2-5 years. Here's a list of job postings for various underwriting specialties that can give you an idea of what real employers were looking for in April 2012:
- A staffing firm in Georgia is seeking conventional mortgage underwriters for a variety of duties, such as reviewing credit packages and loan applications, underwriting government documents and responding to customer inquiries. Qualifications include knowledge of automated underwriting software and approval systems, 2-3 years of experience in mortgage underwriting, a high school diploma and willingness to work evenings and weekends.
- A Pennsylvania insurance company wants to hire a senior property underwriter. This position would entail underwriting complex property and casualty insurance risks. This candidate must have a bachelor's degree and at least five years of commercial underwriting experience.
- A health insurance company is looking for underwriters in Connecticut, Maine and Minnesota to develop benefit packages, prepare renewals and coverage rates, review medical claims and assess coverage risks. This position requires a bachelor's degree or equivalent experience, two years of medical-related underwriting experience and knowledge of Microsoft Office applications.
- A mutual life insurance company in Wisconsin is seeking an underwriter to classify applicant risks, ensure underwriting practices are compliant with regulations and review claims for accuracy. This candidate must have the Life Office Management Association (LOMA) level one designation or an equivalent certification. Candidates who have five years of experience in life or health insurance are preferred.
How to Stand Out in the Field
Get Certified
Certifications can be useful to entry-level candidates and experienced underwriters alike. Some of your certification options include the Certified Residential Underwriter program (CRU Level one) from the Mortgage Bankers Association and the Associate in Commercial Underwriting (AU) designation from the American Institute for Chartered Property Casualty Underwriters (AICPCU). If you're a mid or senior-level underwriter, certifications you may want to check out include the Chartered Property and Casualty Underwriter credential from the AICPCU, the Registered Health Underwriter certification from the American College or the Certified Residential Underwriter Professional (CRU Level two) from the Mortgage Bankers Association.
The amount of experience and education you need usually varies, depending on which certification you're interested in. The CRU Level three designation requires at least four years of industry experience, while other certifications may only require you to pass an exam without previous experience.
Gain Experience in a Specialty
The higher-paying employers want you to have experience in the industry, so getting started while you're in school could give you an edge when you graduate. You'll need to decide which industry to work in, since employers generally want you to have experience in the specialty that they are considering you for. Since underwriters usually use software packages to help them make calculations, learning how to operate the programs that are commonly used for your underwriting specialty can make you more desirable to potential employers.
Other Career Paths
Actuary
An actuary assesses financial risks and help companies develop policies to minimize those risks. Much of the work is similar to that of underwriters, including the insurance specialties you can choose from. You'll need a minimum of a bachelor's degree, and you have to be certified to become an actuary. However, even though the education and training requirements may be higher than those for underwriters, job opportunities for actuaries were projected to increase by 27% from 2010-2020, which was much higher than the projections for underwriters. This career options also offers high earning potential; the BLS reported that actuaries earned an average salary of roughly $103,000 in 2011.
Auditor
If you're the type of person who would rather double-check information for accuracy, then you might be interested in becoming an auditor. Auditors analyze a company's account books and records to check for missing information, excessive spending, evidence of fraud, adherence to policies and compliance with laws and regulations. You generally need a bachelor's degree in accounting or another related discipline for this position. Job opportunities should be decent, as the BLS expected accountants and auditors to experience a 16% increase in employment between 2010 and 2020. However, you may face strong competition for these jobs if you only meet the minimum requirements. In 2011, the BLS found that accountants and auditors made a mean yearly income of approximately $70,000.
