An underwriter issues insurance policies – they decide which policies an insurance company should offer to potential clients, and calculate the premiums.
So what else does an underwriter do? Where do they work?
In this article we look at what an underwriter does, why they are important and how you can become an underwriter.
What is an underwriter?
Underwriters evaluate the risk of insuring various types of insurance;
- General insurance
- This includes household, pets, car and travel insurance
- Life insurance/assurance
- This covers illness, health and death
- Commercial insurance
- This insurance is for companies
- Reinsurance is where part of the risk is placed with the other insurer
Underwriters are heavily involved in risk assessment, as they decide who they should insure based on their specialised knowledge. They do this by obtaining detailed information from prospective policy holders and assess the risks, likelihood and potential cost of a claim. Through risk assessment, insurance underwriters can also look for any insurance issues that may arise. This is done by negotiating with an agent or a broker to find solutions for insurance companies that may reduce or eliminate risk for future claims.
In the event that an insurance case doesn’t have special circumstances, underwriting can be done by automation. An online programme will work out if someone or something can be insured by their insurance company. This can be done for every day insurance such as car, travel and possibly even pet insurance. Underwriters can then get involved if there are multiple claims.
As an underwriter, you may specialise in one type of insurance, as listed above, and you could be doing a range of day to day tasks. For example, you could be gathering and assessing background information to assess risk involved in an insurance proposal. This could include reports or even medical records. You then might be calculating the risk and deciding on the premium, which is how much individuals or organisations should pay for the insurance.
Alternatively, you could be liaising with specialists such as surveyors or doctors for risk assessment, or negotiating terms with policyholders or brokers and writing policies.
What skills do you need to become an underwriter?
If you are an underwriter, you need a wide range of skills that are used day to day. You will have to be both technically minded and able to communicate with a range of people of various different levels of expertise.
To become an underwriter you need to have effective analytical skills with the ability to absorb technical information. This means you need to have a good level of mathematical and statistical ability.
A good underwriter has strong interpersonal and communication skills, as well as the confidence to negotiate and the ability to influence others, as well as the ability to work well in a team.
How much can you earn as an underwriter?
Salary isn’t everything, but it is certainly something to consider when choosing which career path to take.
As a graduate trainee, salaries can start from £24,000 and can go up to £30,000, depending on the company you train with. Once qualified, you can typically earn anything between £25,000 and £40,000 depending on your experience level.
As you work your way up the career ladder to become a senior or a lead underwriter, your earning potential could reach up to £100,000 with the right combination of skills, experience and qualifications.
Where does an underwriter work?
Underwriters can be found in all types of insurance organisation, and you could find yourself working for a larger insurance company that offers a wide range of general insurance, or a smaller company that specialises in one type of insurance. Alternatively you could work at Lloyd’s of London, the world’s specialist insurance and reinsurance market. Working at Lloyd’s means you could specialise in large-scale risk assessments.
You could also find yourself working for a health insurance or life assurance company, or even a bank or a credit agency.
How can I get into underwriting?
Many insurance companies offer underwriting graduate schemes which often last around two years. You can then specialise in a certain area of risk which could take another two or three years as you train.
On a graduate scheme you will be training on the job while working towards your professional insurance qualifications. You may undertake the CII Advanced Diploma in Insurance as this offers you a comprehensive overview of the industry.
Once qualified, you will be able to work your way up, further specialising or training new members of team. You could even move into a different area of insurance, such as risk management or broking. Alternatively, you could move into reinsurance to deal with high levels of risk or more complex cases.
A career as an underwriter is one that offers a huge amount of variety and career progression. You also have the ability to work in a variety of companies with the chance to specialise if you wish.