An insurance underwriter is an insurance professional who evaluates prospective clients of an insurance company to determine whether or not they should be covered, what type of coverage should be offered, and how much the clients should pay for their insurance. Insurance underwriting must walk a fine line in which risk and the desire to retain customers are balanced. If an underwriter is too conservative, customers may seek insurance elsewhere, while liberal underwriting can expose an insurance company to the risk of having to make large payouts.
People use insurance to ensure that in the event of a catastrophe, financial protections are in place to help them bear the expenses associated with the negative event. Insurance policies are available for homes, cars, and businesses, and insurance is also issued to cover health care expenses and a wide variety of other situations which may emerge. When people seek insurance policies, they usually look for the policy which offers the best services and the best value, and the insurance underwriter determines the specifics of the policies offered to clients.
For basic insurance needs, an insurance agent in a field office can fill in information about the client and create a policy on the spot with the assistance of a computer program. If the client has a complex situation, it may need to be referred to an underwriter. Complex or large policies automatically go to an underwriter.
When an insurance underwriter receives an application for review, he or she turns to a computer program to open a new file, fill in basic demographics, and start making risk assessments. For example, someone with a poor driving record who wants to insure a frequently stolen model of car in a crime-prone area represents a significant risk to an insurance company, while a person who garages a car in a very safe neighborhood and drives once a week is much less risky. The insurance underwriter can usually take advantage of computer programs which calculate risks using demographic information and trends in the insurance industry.
The underwriter's first decision is to determine whether or not the client should be covered. If coverage is going to be offered, the insurance underwriter decides what kind of coverage will be offered or required, and how much the premium should be. He or she returns this information to an insurance agent who presents the package to the customer, and the customer can accept the underwriter's decision, or appeal it.
To get insurance underwriting jobs, it helps to have a college degree in accounting or a related field, along with experience in accounting, statistics, or insurance.