Becoming An Insurance Underwriter: A Step-By-Step Guide

Becoming an insurance underwriter involves a mix of education, professional experience, and specialized skills. A bachelor's degree in a related field, such as business, economics, or finance, is typically required, along with strong analytical, computer, and communication skills. Gaining entry-level experience and pursuing relevant certifications can also boost your chances of becoming an insurance underwriter.

Entry requirements: A bachelor's degree in a field like business, economics, finance or accounting is typically required

A bachelor's degree is typically required to become an insurance underwriter. Although there is no one specific degree for aspiring underwriters, a degree in a field like business, economics, finance, or accounting is often pursued. During your degree, it is beneficial to take courses in mathematics, data analysis, and computer literacy. This is because the role of an insurance underwriter is data-heavy and requires the use of analytics technology and programming.

A master's degree is not necessary for entry-level positions, but additional education can be helpful if you want to advance to a higher-level, supervisory position. For example, a Master of Business Administration (MBA) can help you improve your insurance underwriting skills and develop a professional network of industry peers.

While a university degree is not always required, some relevant work experience and computer proficiency may be sufficient for certain employers. However, if you want to become a senior underwriter or underwriter manager, you will likely need to become certified.

On-the-job training: New hires are trained by senior underwriters, learning about risk factors and basic applications

On-the-job training is a crucial aspect of becoming an insurance underwriter. After obtaining an entry-level position, new hires are typically placed under the guidance of senior underwriters or analysts who provide mentorship and support. This training period can last a few months to up to a year and serves as an opportunity for trainees to develop foundational skills and knowledge.

During this training period, new hires are introduced to the software and tools used by the organisation. They start by processing simple insurance applications, gradually progressing to more complex tasks as their expertise grows. Senior underwriters play a pivotal role in helping trainees understand the intricacies of risk assessment, including identifying common risk factors and applying analytical reasoning to make informed decisions.

Trainees learn to evaluate applicants' risk criteria, such as credit scores, prior bankruptcy filings, and medical information. They also gain proficiency in using underwriting software, assessing automated recommendations, and developing their own analytical insights for final determinations. This hands-on training equips new hires with the practical knowledge and skills necessary to become competent and confident insurance underwriters.

In addition to risk analysis, trainees also develop essential soft skills such as interpersonal communication, analytical reasoning, and problem-solving abilities. These skills are honed through collaboration with colleagues and mentors, enabling them to make well-informed and balanced decisions. The on-the-job training period is designed to provide a strong foundation for future career advancement, with some trainees going on to pursue certifications and advanced positions within the field of insurance underwriting.

Career progression: Entry-level positions can lead to senior roles in 5-10 years

Entry-level positions are a great way to get your foot in the door in the insurance underwriting field. These positions often offer on-the-job training, which helps you learn the intricacies of the industry and gain access to the computer skills that will help you advance in your career.

After graduating with a bachelor's degree, you can immediately begin looking for work as an insurance underwriter. You may not need an advanced certification, but new hires typically go through a company's on-the-job training program, which may last a few months. During this time, you'll be paired with a senior underwriter or analyst who will supervise your work and provide guidance. This is a great opportunity to learn the ropes of the job and gain a mentor who can show you the way.

Once you've gained a couple of years of work experience, you can enhance your career qualifications and position yourself for advancement opportunities by earning a professional certification. Certifications can help you stand out and demonstrate your expertise and dedication to the field. They are also a way to advance your career beyond entry-level positions and make you eligible for promotion opportunities.

There are several certifications available for insurance underwriters, such as the Chartered Property and Casualty Underwriter (CPCU) or the Associate in Commercial Underwriting (ACU). These certifications can be earned through organisations like the Insurance Institute of America and the American Institute for Chartered Property Casualty Underwriters.

With the right combination of education, experience, and certifications, you can start applying for advanced positions within your company or look for external opportunities. The diverse nature of the insurance industry provides ample growth opportunities. You can find senior roles in various specialty areas, such as mortgage, life, auto, and health insurance sectors.

It's important to note that career progression can vary, and it may take 5-10 years or even longer to reach a senior position. However, with dedication, a strong work ethic, and a willingness to learn, you can certainly work your way up in the insurance underwriting field and achieve your career goals.

Certification: While not always necessary, certification can help underwriters advance their careers

Certification: A Launchpad for Career Progression

While certification is not always necessary to become an insurance underwriter, it can be a valuable asset for career advancement. The right certification can open doors to senior roles, higher salaries, and greater responsibility.

Reasons to Get Certified

• Career Progression: Certification is often required to advance into senior roles, such as senior underwriter or underwriter manager. It demonstrates expertise and a commitment to the industry, making it a valuable credential when applying for promotions or negotiating raises.
• Specialisation: Certification allows underwriters to specialise in different sectors of the insurance industry, such as life insurance, property and casualty insurance, or commercial insurance. Specialisation can lead to more career opportunities and higher earnings.
• Knowledge and Skills: Certification programs provide in-depth knowledge and skills relevant to the insurance industry. They cover topics such as risk management, insurance policies, and state and federal insurance regulations, ensuring underwriters stay current and competent.
• Employer Requirements: Some employers may require certification as part of their training programs or for advancement within the company. Even if not mandatory, certification can still be beneficial, as it may be reimbursed or count as work hours.

Common Certifications for Insurance Underwriters

• Chartered Life Underwriter (CLU): Offered by the American College of Financial Services, this certification focuses on life insurance policies and procedures. It provides skills for assessing personal risk management and life insurance planning, as well as estate, insurance, and business planning advice.
• Chartered Property Casualty Underwriter (CPCU): This certification is ideal for professionals specialising in risk management, casualty and property insurance, and insurance agents. It is administered by The Institutes and requires completing online courses and exams.
• Associate in Commercial Underwriting (ACU) or Associate in Personal Insurance (API): These certifications are intended for commercial and personal insurance underwriters, respectively. They cover the analysis and management of risks arising from losses related to illness, accidents, injuries, and damage.
• Life Underwriter Training Council Fellow (LUTCF): Offered by the National Association of Insurance and Financial Advisors, this certification provides in-depth experience for entry-level underwriters, building on company training.

Steps to Certification

• Education: While not always required, a bachelor's degree in a related field, such as business, economics, mathematics, or finance, can provide a strong foundation for a career in insurance underwriting.
• Entry-level Position: Gaining work experience in an entry-level insurance role can provide valuable on-the-job training and help individuals determine their career goals and specialisation area.
• Certification Programs: Choose a certification that aligns with your career goals and area of specialisation. Ensure you meet the requirements, which may include work experience, exams, or both.
• Advanced Roles: With certification in hand, individuals can apply for advanced positions within their current company or explore external opportunities. Senior roles often come with higher salaries, increased responsibility, and greater decision-making power.

In conclusion, while certification may not be mandatory for all insurance underwriter roles, it can be a powerful tool for career advancement, providing specialised knowledge, enhanced employability, and access to senior positions.

Skills: Underwriters need advanced computer knowledge, analytical thinking, verbal communication, critical decision-making and attention to detail

Advanced Computer Knowledge

Underwriters need to be proficient in using computer software and must be comfortable working with spreadsheet data. They are required to use various technical programs and software to analyse risk data and complete risk assessments and other documentation in online programs.

Analytical Thinking

Underwriters need to be able to think analytically to interpret data. They must be experienced in examining the types of data they are presented with and measuring it against the insurance company's standards. They must be able to analyse credit applications and the risks associated with IPOs, securities trading, debt issues, and equity markets.

Verbal Communication

Underwriters should be able to communicate effectively with insurance companies, sales agents, and clients regarding a client's eligibility. They need to be able to consult with industry professionals to come to a conclusion about a particular applicant. They must also be able to communicate the results of their analysis to others in the field, including clients, colleagues, insurance agents, and other financial professionals.

Critical Decision-Making

Underwriters need to make challenging decisions about insurance applicants. They have to consider the risks that a potential client presents to an insurance company, which sometimes means denying an applicant coverage. They have to be able to make the decision that is right for the company. They must achieve a balance between risky and cautious decisions.

Attention to Detail

Underwriters must pay close attention to the data they are analysing and must be able to identify and correct errors on client documentation. Creating accurate insurance policies and rates requires focusing on many small details that come together to create a potential policyholder's profile.

Frequently asked questions