Underwriters are often labeled as the bad guys because they control the flow of finances and they’re the ones who decide what you pay for your home or car insurance. But, there is a lot more to being an underwriter than just crunching numbers and reading a policy. Find out what being part of this profession means for you in this post about working with underwriters.
Learn About Being an Underwriter
A career in the field of underwriting is a great option for anyone with interest in the insurance industry. Underwriters are those who write policies and evaluate risk, so they understand a company’s financial health as well as its ability to pay claims. They also have to be able to assess the risk of every policy, which usually involves evaluating every aspect of a company’s operations, including its assets and liabilities.
If you’re interested in becoming an underwriter but aren’t sure where to start, check out this blog post on what it takes to become an underwriter. Here are some tips on how to get started and what you should expect after graduating from an accredited school or program.
Who is called underwriter?
The underwriter is a person or company that agrees to buy an insurance policy from a risk-sharing entity, such as an insurance company. They are also called the “nose.” In the context of commercial enterprise, the underwriter is often the entity which provides capital for a business startup. The term “underwriting” comes from the Boston Underwriters (a group of financial services specialists).
The underwriter has two roles in this process: one is to act as an advisor, and the other role is to oversee activities related to setting up and running a business. If this process does not happen well, then it could even lead to failure of the business startup.
What does an underwriter do?
An underwriter is a person who writes insurance policies, or makes sure that lenders and investors can trust a company. In financial circles, underwriters are known for their rigorous standards and unbiased judgments. They make sure that every aspect of a company’s business plan is safe for other people to invest in. When an underwriter finds something suspicious about a business, they will often contact the authorities to help them find out if there is anything illegal going on.
If you want to be an underwriter, these are some ways you should think about your work ethic and how it fits into the world of finance.
An underwriter examines loan, mortgage, insurance or securities applications to determine risk. They base their assessment on a careful analysis of the applicant’s data. An underwriter’s job responsibilities include:
Examining applications for loans, mortgages, insurance or initial public offerings (IPOs)
Calculating the risk based on information provided through the application process
Conducting research to evaluate an application
Using computer software to help make an approval decision
Approving or declining each application based on the risk
Have you ever wondered what the average salary for an underwriter is? If so, you’re in luck. This article will help you learn more about the career and what it takes to be a professional in the field. It will also give you a better understanding of how much money this job can actually earn.
The median annual salary for an underwriter is $80,000 per year. There are some careers that have higher salaries than this, but most underwriters make around this amount. With this type of income, your career as an underwriter will easily pay off as long as you’re willing to put in the work needed to advance your position within the company.
Underwriters normally work regular business hours. They may occasionally need to work nights or weekends when they need to meet deadlines. An underwriter’s salary may depend on their experience and certifications. The size, type and location of the business in which they work could also affect their salary.
Common salary in the U.S.: $67,169 per year
Some salaries range from $15,000 to $157,000 per year.
The requirements for becoming an underwriter will differ depending on where you live. The most common are:
In most cases, you will need a bachelor’s degree to become an underwriter. You may not find a specific major in underwriting, but there are other degrees that will help you find employment, such as finance, accounting, mathematics or business. An underwriter’s work involves research and working with data, so any courses that teach computer and mathematical skills are helpful. Some employers may hire underwriters with relevant work experience and excellent skills.
Entry-level underwriting jobs with banks, credit unions, brokers and other financial institutions normally involve training. During on-the-job training, an underwriter will learn the processes and procedures that the company uses regularly to evaluate applications. An underwriter will also receive instruction on any specific computer programs or software necessary to complete tasks.
As loan regulations continually change, an underwriter should maintain the most current knowledge of state and federal guidelines. They can attend seminars or conferences to ensure they stay up to date on industry changes and learn more about the various aspects of underwriting.
Though you don’t need a certification to become an underwriter, earning one can demonstrate your dedication to your role and expand job opportunities available to you. Here are three of the most common underwriter certifications:
Certified Residential Underwriter (CRU)
This Mortgage Bankers Association (MBA) program offers a residential mortgage loan underwriter certification. There are three progressive levels, each with its own certification. Successful completion of the Basic level gives you the Residential Underwriter Achievement Certificate. It also qualifies you to take the next level if you wish. When you pass the Intermediate level, you receive the Residential Underwriter Professional Certificate. You can then take the Advanced level course, which earns you the CRU Specialist Designation. You can take all of the courses and exams online.
Chartered Life Underwriter (CLU)
Offered by the American College of Financial Services, this designation is for those interested in insurance underwriting. Courses include teaching the fundamentals of insurance and estate planning, life insurance law, income taxation and investments. You can complete the program through self-paced study or through live online classes. To receive the designation, you must complete eight courses, pass the exams and meet certain experience and ethical requirements. You also need to re-certify every two years through their re-certification program.
American Institute for Chartered Property Casualty Underwriters (“The Institutes”)
The Institutes offer the Chartered Property Casualty Underwriter (CPCU) and the Associate in Commercial Underwriting (ACU) designations. Intermediate and advanced level courses are available for both. You can complete the ACU program in nine to 15 months and the CPCU in two to three years. There are additional requirements to earn these designations, including passing foundation courses, complying with ethical standards and completing a minimum number of experience hours.
Underwriters need a certain set of skills to excel within the role, including:
Computer skills: Computers complete most of the statistical analysis work for underwriters. Each industry has its own specific software underwriters need to learn and become comfortable with. It can be helpful to learn spreadsheet software like Microsoft Excel. They may also need to use a computer to conduct research.
Analytical skills: There are many factors that determine an applicant’s risk. A good underwriter is able to examine each factor, assess it appropriately and come to a decision. Computer software can be a useful tool to help make that decision. However, they still need to consider those results to decide whether they should approve the application.
Mathematical skills: Though a computer will perform most of the math involved in an application, underwriters need to verify the accuracy before making a decision. They use statistics and probabilities most often when calculating an appropriate rate or determining the likelihood that the applicant will file a claim.
Communication skills: Part of an underwriter’s research work involves communicating with customers. They not only need to speak clearly but also ask the right questions in a friendly and professional manner. It is also important that they listen carefully to the answers so they can respond appropriately. Underwriters often negotiate with customers and investors, which requires them to have confidence in their communication ability. Professional communication skills may also attract potential clients.
Underwriter work environment
Underwriters typically work in an office setting. They sit for extended periods of time while working at a computer, either entering or analyzing data. They may occasionally have interaction with agents, either in person, over the phone or via email. It is also possible for underwriters to travel to attend meetings. Most underwriters work within financial services, usually with a bank, a credit union, insurance agency or investment company. Underwriters typically work normal business hours with occasional overtime.
How to become an underwriter
These are the steps to becoming an underwriter:
Earn a degree. The most desirable degrees are in finance-related fields. Good examples are mathematics, business and accounting. Any coursework you can do to improve your computer skills will also benefit you. Some companies that hire underwriter managers may seek applicants with a master’s degree in business administration.
Apply for an entry-level job. Most underwriters start out working for a bank or other such financial services company in an entry-level position. This might be as an underwriter’s assistant, or an underwriter under the direct supervision of a senior underwriter. This job is will help you get comfortable with analyzing data and assessing risks. As you progress in knowledge and experience, your supervisor will give you more independent work and responsibility.
Take a certification course. This is not required, but it will help establish you as an underwriter and potentially increase your salary. Look for certification programs within your particular field of underwriting. For example, if you are working as an insurance underwriter, you might consider the Chartered Life Underwriter designation offered by the American College of Financial Services.
Underwriter job description example
Acme Insurance Company is seeking a detail-oriented insurance underwriter. As part of our team, you will review insurance applications and conduct credit, background checks and other necessary research on applicants. We will look to you to provide competitive insurance premium quotes and negotiate the specific policy terms. This is a full-time salaried position with the opportunity for advancement.
The right candidate will have:
Exceptional analytical skills
Excellent computer and mathematical skills
Good communication skills
Bachelor’s degree or higher in a business or finance field
Minimum of two years underwriting experience