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Insurance Underwriters - What They Do


How to Advance (Advancement)
Continuing education is necessary for advancement, because changes in tax laws, government benefits programs, and other State and Federal regulations can affect the insurance needs of clients and businesses. Independent-study programs for experienced underwriters are also available. The Insurance Institute of America offers a training program for beginning underwriters. The Institute also offers the designation of Associate in Commercial Underwriting (ACU) for those starting a career in underwriting business insurance policies, or an Associate in Personal Insurance (API) for those interested in underwriting personal insurance policies. To earn either the ACU or API designation, underwriters complete a series of courses and examinations that generally last 1 to 2 years.

The American Institute for Chartered Property Casualty Underwriters awards the Chartered Property and Casualty Underwriter (CPCU) designation to experienced underwriters. Earning the CPCU designation requires passing eight exams, having at least 3 years of insurance experience, and abiding by the Institute's and CPCU Society's code of professional ethics.

The American College offers the equivalent Chartered Life Underwriter (CLU) designation and the Registered Health Underwriter (RHU) designation for life and health insurance professionals. For those new to the industry, the American College also offers the Life Underwriter Training Council Fellow (FUTCF), an introductory course that teaches basic insurance concepts.

Experienced underwriters who complete courses of study may advance to senior underwriter or underwriting manager positions. Some underwriting managers are promoted to senior managerial jobs, but these managers often need a master's degree. Other underwriters are attracted to the earnings potential of sales and, therefore, obtain State licenses to sell insurance and related financial products as agents or brokers.

Employment
Insurance underwriters held about 102,900 jobs in 2008. Insurance carriers employed 67 percent of all underwriters. Most of the remaining underwriters work in insurance agencies and brokerages.

Most underwriters are based in the insurance company's home office. But some, mainly in the property and casualty area, work out of regional branch offices of the insurance company. These underwriters usually have the authority to underwrite most risks and determine an appropriate rating without consulting the home office.

Job Outlook
Although employment is expected to decline slowly, job prospects will remain good because of high turnover.

Job Growth
Employment of underwriters is expected to decline 4 percent during the 2008-18 decade. Demand for underwriters will continue to be offset by automation and technological advancement—factors that have resulted, in large part, to stagnant employment levels over the past two decades. For example, upgrades to underwriting software have helped increase underwriter productivity. Automated underwriting quickly rates and analyzes insurance applications, reducing the need for underwriters. In addition, adoption of this technology into other segments of insurance, such as life and health and long-term care, will continue to impede employment growth through the projection period, although at a slower rate than in the past. Nonetheless, even as automated underwriting continues to be adopted and upgrades to underwriting software makes workers more productive, the need for humans to verify information will continue.

Additionally, some demand for underwriters may arise as insurance carriers try to restore profitability. As the carriers' returns on their investments have declined, insurers may place more emphasis on underwriting to generate revenues. An expected increase in sales of health insurance and long-term care insurance, designed specifically for the elderly, also may result in some new jobs. As members of the baby-boom generation grow older and a growing share of the Nation's population moves into the older age groups, more people are expected to purchase these kinds of insurance products.

Job opportunities should be best for those with experience in related insurance jobs, a background in finance, and strong computer and communication skills. The need to replace workers who retire or transfer to another occupation will create many job openings. In fact, high turnover will account for most job openings. High turnover among underwriters results, in part, from the limited upward mobility of workers in the occupation—a scenario that is likely to continue through the projections decade (2008-18).

New and emerging fields of insurance may also be a source of job opportunities for underwriters. Insurance carriers are always assessing new risks and offering new types of policies to meet changing circumstances. Underwriters are needed particularly in product development, where they assess risks and set the premiums for new lines of insurance. Growing demand for long-term care insurance—a relatively new product offered by insurance carriers—may also provide some job opportunities for underwriters.

Earnings
Median annual wages of wage and salary insurance underwriters were $56,790 in May 2008. The middle 50 percent earned between $43,490 and $76,700 a year. The lowest 10 percent earned less than $35,010, and the highest 10 percent earned more than $99,940. Median annual wages of underwriters working with insurance carriers were $57,480, while underwriters' median annual wages in agencies, brokerages, and other insurance-related activities were $54,410.

Insurance companies usually provide better-than-average benefits, including retirement plans and employer-financed group life and health insurance. Insurance companies usually pay tuition for underwriting courses that their trainees complete, and some also offer salary incentives.

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