Underwriter Job Description: Duties, Skills and Career Path
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Underwriter Job Description
A risk underwriter is an insurance industry professional, whose job is to evaluate the risk of insuring a prospective client and thereby to determine the insurance premium that the client will be asked to pay.
What does an underwriter do?
Underwriters work for insurance companies, analyzing the risk profile of potential clients, deciding whether a risk is insurable (and if so to what extent), determining the premium to be paid by the client and deciding the terms and conditions of the insurance policy. Typically, an underwriter is involved in the insurance process before an insurance policy is drafted and then again when a policy is coming up for renewal. At the renewal stage, an underwriter’s job is to assess the situation and decide whether the insurance company is prepared to continue providing coverage at the same terms and conditions, or if it will present the client with a new set of terms and conditions.
When carrying out a risk assessment, underwriters consider a variety of data, including age (e.g. of a person, car or house), insurance history and environmental factors etc. and use algorithms, actuarial analyses and statistical data to determine the probability of valid claims occurring during the period of validity of the policy and the size of such claims. In order to arrive at a reliable estimation of the risk, underwriters may also enlist the help of external technical consultants (e.g. engineers) and, where necessary, may carry out visits and inspections.
An efficient risk underwriting service is critical to an insurance company’s financial performance, as its underwriters are able to determine whether or not it will be profitable for the company to insure against a specific risk. Profit - i.e. what remains to the insurance company after it has settled any claims - is in fact the primary focus in the work of an underwriter.
Underwriters often act as a contact between the insurance company and the insurance agent or broker, providing the latter with technical support for insurance products that require a subjective evaluation of risk. They typically specialize in a specific type of insurance product: engineering insurance underwriters, for example, are responsible for assessing the risks associated with specific engineering projects, plants, systems or items of equipment and for issuing custom quotes based on their assessment. Other specialist insurance products include life insurance, fire insurance, legal insurance, technology risk insurance, real estate insurance, deposit insurance, third party motor insurance and professional liability insurance.
Underwriters are typically employed by insurance companies. They usually work in offices and have a standard full-time working week, from Monday to Friday.
Underwriter - Responsibilities and Tasks
The main responsibilities of an underwriter are:
- Evaluating insurance applications
- Assessing the kind and degree of risk involved
- Accepting or rejecting underwriting proposals
- Defining the terms and conditions of the insurance coverage and the premium
- Re-assessing risk when policies come up for renewal
How to Become an Underwriter - Education, Training and Requirements
There are routes into an insurance underwriting career for school leavers holding a high-school diploma with a technical focus, although employers may prefer candidates to hold a degree, preferably in a field such as law, economics, mathematics, statistics or engineering. The ideal candidate would also have some industry experience, for example, with an insurance brokerage firm.
Often, newly hired underwriters are required to attend in-house training courses designed to provide them with the knowledge and skills they will need as risk assessors and underwriters. Such courses typically cover a range of topics, including how to use complex risk rating models, the methods applied for determining insurance premiums and, last, but by no means least, the legislative and regulatory framework governing the insurance industry.
Skills and Qualifications
Underwriters require the following skills:
- Technical insurance knowledge
- Ability to use algorithms, statistical data and actuarial calculations to carry out risk assessments
- Analytical approach
- Ability to make decisions independently
- Attention to detail
- Communication skills
Underwriter Career Path
A career as an underwriter typically begins with an entry-level position, such as underwriting assistant or junior underwriter. This is an opportunity for a new hire to learn the ‘tools of the trade’ - for example the methods and techniques used in interpreting data and statistics or determining the probability of claims. With experience, a junior underwriter can expect to eventually advance to a position as a senior underwriter and perhap even progress further, to a role as underwriting coordinator or portfolio manager for a specific type of insurance product.
From here, the subsequent career path involves increasing levels of responsibility and, eventually, the possibility of promotion to a role in top management.
Top Reasons to Work as an Underwriter
Why should you consider working as an underwriter?
Underwriters have a very important, specialist role to play in the insurance industry. Deciding whether or not to offer insurance coverage and at what price based on assessments of the associated risk is, after all, a highly complex process, which comes with a great deal of responsibility.
That responsibility is rewarded, however, with good job security, an attractive salary package and interesting career development opportunities. For example, a job as an underwriter may act as a springboard to a managerial role in a brokerage firm or insurance company.