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Underwriters: How to Become One

An underwriter is a party responsible for evaluating and assessing whether a financial risk is worth taking. The assessment is conducted for a fee, typically in the form of a commission, premium, spread or interest.

Underwriters perform different functions that depend on the context. Underwriters in the financial world help investors determine if a risk is worth taking or help a company launching an initial public offering (IPO). There are underwriters when you are applying for a personal loan, a health insurance policy, or a mortgage.

To become an insurance underwriter, you typically need a bachelor’s degree. However, some employers may hire you as an underwriter without a degree if you have relevant work experience and computer proficiency. To become a senior underwriter or underwriter manager, you need to obtain certification.

Computer proficiency and so-called “math skills” are crucial for excelling in this research and data-driven field.

Insurance Underwriter

Insurance underwriters are responsible for reviewing applications for coverage and for making the decision to accept or reject an applicant through the use of risk analysis. Insurance brokers and other entities submit insurance applications for their clients, and insurance underwriters look over the application and make a decision on whether coverage will be offered or not.

Insurance underwriters also advise on risk management issues, make decisions about coverage for individuals, and decide if existing clients should continue receiving coverage, and at the same level.

Fast Fact

The median annual salary for insurance underwriters, as of May 2018, according to the U.S. Bureau of Labor Statistics, was $69,760; the top 90% of insurance underwriters earn up to $122,840.

Education Needed to Be an Underwriter

You don’t need a specific bachelor’s degree to become an underwriter, but courses in mathematics, business, economics, and finance are beneficial in this field. A good underwriter is also detail-oriented and has excellent skills in math, communication, problem-solving and decision making.

Once hired, you typically train on the job while supervised by senior underwriters. As a trainee, you learn about common risk factors and basic applications used in underwriting. As you become more experienced, you can begin to work independently and take on more responsibility.

Your employer may require you to get certified as part of your training or to advance to a senior underwriter position. Completing certification courses helps you stay current on insurance policies, technologies, and state and federal insurance regulations.

Key Takeaways

  • An underwriter is any party that assesses and takes on another party’s risk, in exchange for a fee.
  • Underwriters are used in the debt and equity markets, with mortgages, with health care policies and other forms of insurance.
  • Insurance underwriters review and assess applications for coverage and determine whether the risk is worth taking.
  • A bachelor’s degree that includes coursework in economics, business, accounting, finance, or mathematics is ideal.
  • New hires get on-the-job training from senior underwriters, but in order to advance, an underwriter must complete key certification programs.

Underwriting Training Offered

The American Institute For Chartered Property Casualty Underwriters offers a training program for beginning underwriters. It also offers two special certifications: associate in personal insurance and associate in commercial underwriting. These certifications typically require two years of coursework and exams to complete.

For more experienced underwriters, the institute offers a chartered property and casualty underwriter certification. The American College of Financial Services also offers certification options for underwriters, the chartered life underwriter designation.

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