Insurance underwriters decide whether to provide insurance, and under what terms. They evaluate insurance applications and determine coverage amounts and premiums.
Insurance underwriters typically do the following:
- Analyze information stated on insurance applications
- Determine the risk involved in insuring a client
- Screen applicants on the basis of set criteria
- Evaluate recommendations from underwriting software
- Contact field representatives, medical personnel, and others to obtain further information
- Decide whether to offer insurance
- Determine appropriate premiums and amounts of coverage
- Review and update the rules that govern automation software
Underwriters are the main link between an insurance company and an insurance agent. Insurance underwriters use computer software programs to determine whether to approve an applicant. They take specific information about a client and enter it into a program. The program then provides recommendations on coverage and premiums. Underwriters evaluate these recommendations and decide whether to approve or reject the application. If a decision is difficult, they may consult additional sources, such as medical documents and credit scores.
For simple and common types of insurance, such as automobile insurance, underwriters can typically rely on automated recommendations. For more specific and complex insurance types, such as workers’ compensation, underwriters need to rely more on their own analytical insight.
Underwriters analyze the risk factors appearing on an application. For instance, if an applicant reports a previous bankruptcy, the underwriter must determine whether that information is relevant to the policy being applied for. The underwriter would likely consider how far in the past the bankruptcy occurred and how the applicant’s financial situation has changed since the applicant filed for bankruptcy.
Insurance underwriters must achieve a balance between risky and cautious decisions. If underwriters allow too much risk, the insurance company will pay out too many claims. But if they don’t approve enough applications, the company will not make enough money from premiums.
Most insurance underwriters specialize in one of three broad fields: life, health, and property and casualty. Although the job duties in each field are similar, the criteria that underwriters use vary. For example, for someone seeking life insurance, underwriters consider the person’s age and financial history. For someone applying for car insurance (a form of property and casualty insurance), underwriters consider the person’s driving record.
Within the broad field of property and casualty, underwriters may specialize even further into commercial (business) insurance or personal insurance. They may also specialize by the type of policy, such as for automobiles, boats (marine insurance), or homes (homeowners’ insurance).
Insurance underwriters held about 110,400 jobs in 2018. The largest employers of insurance underwriters were as follows:
|Direct insurance (except life, health, and medical) carriers||42%|
|Insurance agencies and brokerages||22|
|Other insurance related activities||7|
|Direct health and medical insurance carriers||4|
|Credit intermediation and related activities||4|
Underwriters work indoors in offices. Although underwriters spend most of their time working alone on applications at a computer, they sometimes must handle customer inquiries.
Some property and casualty underwriters may travel to assess properties in person.
Most underwriters work full time.
Employers prefer to hire candidates who have a bachelor’s degree. However, insurance-related work experience and strong computer skills may be enough for some positions. Certification is generally necessary for advancement to senior underwriter and underwriter manager positions.
Most employers prefer to hire applicants who have a bachelor’s degree. Although a specific major is not required, some coursework in business, finance, economics, and mathematics is helpful.
Beginning underwriters usually work as trainees under the supervision of senior underwriters. Trainees work on basic applications and learn the most common risk factors. Some companies offer training programs that include classroom instruction on the basics of underwriting.
As new underwriters gain experience, they work independently and handle more complex applications.
Licenses, Certifications, and Registrations
Employers often expect underwriters to become certified through coursework. These courses are important for keeping current with new insurance policies and for adjusting to new technology and changes in state and federal regulations. Certification is often necessary for advancement to senior underwriter and underwriter management positions. Many certification options are available.
For underwriters with at least 2 years of insurance experience, The Institutes offer the Chartered Property and Casualty Underwriter (CPCU) designation. For beginning underwriters, The Institutes offer a training program.
The Institutes also offer several other designations in insurance specialties, including the Associate in Commercial Underwriting (AU) and Associate in Personal Insurance (API). To earn these designations, underwriters complete a series of courses and exams that generally takes 1 to 2 years.
The National Association of Insurance and Financial Advisors offers the Life Underwriter Training Council Fellow (LUTCF) designation, which consists of a three-part curriculum in basic insurance concepts.
The American College of Financial Services offers the Chartered Life Underwriter (CLU) certification. This certification consists of five core courses and three electives, and candidates must have 3 years of related work experience.
Analytical skills. Underwriters must be able to evaluate information from a variety of sources and solve complex problems.
Decisionmaking skills. The core function of an underwriter is making decisions, such as whether to offer insurance coverage and at what level to set premiums.
Detail oriented. Underwriters must pay attention to detail, because each individual item on an insurance application can affect the coverage decision.
Interpersonal skills. Underwriters need good communication and interpersonal skills because much of their work involves dealing with other people, such as insurance agents.
Math skills. Determining the probability of losses on an insurance policy and calculating appropriate premiums require mathematical ability.
The median annual wage for insurance underwriters was $69,380 in May 2018.
The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. The lowest 10 percent earned less than $42,260, and the highest 10 percent earned more than $122,840.
In May 2018, the median annual wages for insurance underwriters in the top industries in which they worked were as follows:
|Credit intermediation and related activities||$75,700|
|Direct insurance (except life, health, and medical) carriers||69,470|
|Direct health and medical insurance carriers||68,090|
|Other insurance related activities||67,700|
|Insurance agencies and brokerages||67,310|
Most underwriters work full time.
Median annual wages, May 2018
- Financial specialists
- Insurance underwriters
- Total, all occupations
Employment of insurance underwriters is projected to decline 5 percent from 2018 to 2028. Automated underwriting software allows workers to process applications more quickly than before, reducing the need for as many underwriters. As this technology improves and becomes more widely adopted in the insurance industry, more underwriting decisions will likely be made automatically.
However, there still will be a need for underwriters to review and update the criteria that run the automation. In addition, their analytical insight will still be needed in complex or specific insurance fields, such as workers’ compensation, marine insurance, or health insurance.
Job opportunities should be best for those with a background in finance and strong computer and analytical skills.
|Occupational Title||SOC Code||Employment, 2018||Projected Employment, 2028||Change, 2018-28||Employment by Industry|
SOURCE: U.S. Bureau of Labor Statistics, Employment Projections program
This table shows a list of occupations with job duties that are similar to those of insurance underwriters.
|Occupation||Job Duties||Entry-Level Education||Median Annual Pay, May 2018|
Actuaries use mathematics, statistics, and financial theory to analyze the financial costs of risk and uncertainty.
Budget analysts help public and private institutions organize their finances.
Claims Adjusters, Appraisers, Examiners, and Investigators
Claims adjusters, appraisers, examiners, and investigators evaluate insurance claims.
|See How to Become One||$65,670|
Cost estimators collect and analyze data in order to estimate the time, money, materials, and labor required to make a product or provide a service.
Insurance Sales Agents
Insurance sales agents contact potential customers and sell one or more types of insurance.
|High school diploma or equivalent||$50,600|
Loan officers evaluate, authorize, or recommend approval of loan applications for people and businesses.
For more information about property and casualty insurance, visit
Insurance Information Institute
For more information about certifications, visit
Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, Insurance Underwriters,
on the Internet at https://www.bls.gov/ooh/business-and-financial/insurance-underwriters.htm (visited ).