Most large insurance companies prefer college graduates who
have a degree in business administration or finance with courses
in accounting; however, a bachelor’s degree in any field—plus
courses in business law and accounting—may be sufficient to
Continuing education is necessary for advancement.
Employment is expected to grow more slowly than average as
the continuing spread of underwriting software increases worker
Job opportunities should be best for those with a background
in finance and strong computer and communication skills.
Nature of the Work
Insurance companies protect individuals and organizations
from financial loss by assuming billions of dollars in risk
each year. Underwriters are needed to identify and calculate
the risk of loss from policyholders, establish appropriate
premium rates, and write policies that cover this risk. An
insurance company may lose business to competitors if the
underwriter appraises risks too conservatively, or it may
have to pay excessive claims if the underwriting actions are
With the aid of computers, underwriters analyze information
in insurance applications to determine whether a risk is acceptable
and will not result in a loss. Applications often are supplemented
with reports from loss-control consultants, medical reports,
reports from data vendors, and actuarial studies. Underwriters
then must decide whether to issue the policy and, if so, the
appropriate premium to charge. In making this determination,
underwriters serve as the main link between the insurance
carrier and the insurance agent. On occasion, they accompany
sales agents to make presentations to prospective clients.
Technology plays an important role in an underwriter’s job.
Underwriters use computer applications called “smart systems”
to manage risks more efficiently and accurately. These systems
automatically analyze and rate insurance applications, recommend
acceptance or denial of the risk, and adjust the premium rate
in accordance with the risk. With these systems, underwriters
are better equipped to make sound decisions and avoid excessive
The Internet also has affected the work of underwriters.
Many insurance carriers’ computer systems are now linked to
different databases on the Internet that allow immediate access
to information—such as driving records—necessary in determining
a potential client’s risk. This kind of access reduces the
amount of time and paperwork necessary for an underwriter
to complete a risk assessment.
Most underwriters specialize in one of three major categories
of insurance: life, health, and property and casualty. Life
and health insurance underwriters may further specialize in
group or individual policies.
Property and casualty underwriters usually specialize in
either commercial or personal insurance and then by type of
risk insured, as in fire, homeowners’, automobile, marine,
or liability insurance, or workers’ compensation. In cases
where casualty companies provide insurance through a single
“package” policy covering various types of risks, the underwriter
must be familiar with different lines of insurance. For business
insurance, the underwriter often must be able to evaluate
the firm’s entire operation in appraising its application
An increasing proportion of insurance sales, particularly
in life and health insurance, is being made through group
contracts. A standard group policy insures everyone in a specified
group through a single contract at a standard premium rate.
The group underwriter analyzes the overall composition of
the group to ensure that the total risk is not excessive.
Another type of group policy provides members of a group—a
labor union, for example—with individual policies reflecting
their needs. These usually are casualty policies, such as
those covering automobiles. The casualty underwriter analyzes
the application of each group member and makes individual
appraisals. Some group underwriters meet with union or employer
representatives to discuss the types of policies available
to their group.
Underwriters have desk jobs that require no unusual physical
activity. Their offices usually are comfortable and pleasant.
Although underwriters typically work a standard 40-hour week,
more are working longer hours due to the downsizing of many
insurance companies. Most underwriters are based in a home
or regional branch office, but they occasionally attend meetings
away from home for several days. Construction and marine underwriters
frequently travel to inspect worksites and assess risks.
Training, Other Qualifications, and Advancement
For entry-level underwriting jobs, most large insurance companies
prefer college graduates who have a degree in business administration
or finance with courses or experience in accounting. However,
a bachelor’s degree in almost any field—plus courses in business
law and accounting—provides a good general background and
may be sufficient to qualify an individual. Because computers
are an integral part of most underwriters’ jobs, computer
skills are essential.
New employees usually start as underwriter trainees or assistant
underwriters. They may help collect information on applicants
and evaluate routine applications under the supervision of
an experienced risk analyst. Property and casualty trainees
study claims files to become familiar with factors associated
with certain types of losses. Many larger insurers offer work-study
training programs, lasting from a few months to a year. As
trainees gain experience, they are assigned policy applications
that are more complex and cover greater risks. Analyzing and
processing these applications efficiently requires the use
Underwriting can be a satisfying career for people who enjoy
analyzing information and paying attention to detail. In addition,
underwriters must possess good judgment in order to make sound
decisions. Excellent communication and interpersonal skills
also are essential, as much of the underwriter’s work involves
dealing with agents and other insurance professionals.
Continuing education is necessary for advancement. Insurance
companies usually pay tuition for underwriting courses that
their trainees complete; some also offer salary incentives.
Independent-study programs for experienced property and casualty
underwriters are available as well. The Insurance Institute
of America offers both a program called “Introduction to Underwriting”
for beginning underwriters, and the specialty designation
of Associate in Commercial Underwriting (ACU), a formal step
in developing a career in underwriting business insurance
policies. Those interested in developing a career underwriting
personal insurance policies may earn the Associate in Personal
Insurance (API) designation. 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
(AICPCU) awards the Chartered Property and Casualty Underwriter
(CPCU) designation, the final stage of development for an
underwriter. Earning the CPCU designation requires passing
10 exams, meeting a requirement of at least 3 years of insurance
experience, and abiding by the AICPCU's code of professional
ethics. Exams cover risk management; insurance operations
and regulations, business and insurance law, and financial
management and financial institutions. In conjunction with
the Insurance Institute of America, the AICPCU offers 22 insurance-related
educational programs, including associate designation programs
in claims underwriting, risk management, and reinsurance.
The American College offers the Chartered Life Underwriter
(CLU) designation and the Registered Health Underwriter (RHU)
designation for all life and health insurance professionals.
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. Some employers require a master’s degree to achieve
this level. 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
Insurance underwriters held about 101,000 jobs in 2004. Approximately
2 out of 3 underwriters work for insurance carriers. Most
of the remaining underwriters work in insurance agencies or
for organizations that offer insurance services to insurance
companies and policyholders. A small number of underwriters
work in agencies owned and operated by banks, mortgage companies,
and real estate firms.
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.
Employment of underwriters is expected to grow more slowly
than average for all occupations through 2014. Underwriting
software will continue to make workers more productive; however,
because computer software does not do away with the need for
human skills, employment will increase as economic and population
growth result in increased insurance needs by businesses and
individuals. Job opportunities should be best for those with
a background in finance and strong computer and communication
skills. In addition to openings arising from some job growth,
openings will be created by the need to replace underwriters
who transfer to another job or leave the occupation.
Insurance carriers always are assessing new risks and offering
policies to meet changing circumstances. Underwriters are
needed particularly in the area of product development, where
they assess risks and set the premiums for new lines of insurance.
One new line of insurance being offered by life insurance
carriers that may provide job opportunities for underwriters
is long-term care insurance.
Demand for underwriters also is expected to improve as insurance
carriers try to restore profitability to make up for an unusually
large number of underwriting losses in recent years. As the
carriers’ returns on their investments have declined, insurers
are placing more emphasis on underwriting to generate revenues.
This renewed interest in underwriting should result in job
opportunities for underwriters.
Because insurance is considered a necessity for people and
businesses, there will always be a need for underwriters—a
profession that is less subject to recession and layoffs than
Median annual earnings of insurance underwriters were $48,550
in May 2004. The middle 50 percent earned between $37,490
and $65,450 a year. The lowest 10 percent earned less than
$30,410, while the highest 10 percent earned more than $86,110.
Median annual earnings of underwriters working with insurance
carriers were $49,280, while earnings of these in agencies,
brokerages, and other insurance related activities were $46,750.
Insurance companies usually provide better-than-average benefits,
including retirement plans and employer-financed group life
and health insurance.
Underwriters make decisions on the basis of financial and
statistical data. Other workers with the same type of responsibility
include accountants and auditors, actuaries, budget analysts,
cost estimators, financial analysts and personal financial
advisors, financial managers, loan officers, and credit analysts.
Other related jobs in the insurance industry include insurance
sales agents and claims adjusters, appraisers, examiners,
and investigators. See the Career
Database for more information on these careers.
Sources of Additional Information
Information about a career as an insurance underwriter is
available from the home offices of many insurance companies.
Information about the property-casualty insurance field can
be obtained by contacting:
Insurance Information Institute, 110 William St., New
York, NY 10038. Internet: http://www.iii.org/
Information on careers in the life insurance field can be