What Is an Underwriter in Insurance? (With Types and Duties)

By Indeed Editorial Team

Published 23 August 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Insurance underwriters play an essential role in helping people get insurance plans that meet their needs at an affordable price. These professionals need a mix of communication and mathematical analysis skills to help them assess a customer's qualifications and liabilities accurately. Learning about the dynamics of this occupation can help you make a more informed decision about whether this is a job that aligns with your career goals. In this article, we answer the question 'what is an underwriter in insurance?', review their primary duties, examine the underwriting process and explore some frequently asked questions.

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What is an underwriter in insurance?

To understand what is an underwriter in insurance, this professional assesses a customer's financial and medical history to determine what type of insurance plans they qualify for. Customers who they believe pose minimal risk to the insurance company, generally get plans that are less expensive and come with many benefits. In comparison, an underwriter usually offers more expensive insurance plans to customers who pose significant risk, and these plans may have stipulations for reaping the benefits. They perform risks assessments and use highly complex spreadsheets and tables to determine the likelihood that a customer may get into an accident or fall ill.

Different types of insurance underwriting include:

Full underwriting

Full underwriting is a comprehensive process that involves a medical questionnaire and a medical exam. Anyone can get this kind of underwriting option through an insurance agent. However, you usually disclose any pre-existing medical conditions to the agent when you apply for an insurance plan. Using your information, the full underwriting policy documents explain which conditions the agency does not cover in your insurance premiums.

Guaranteed issue

In guaranteed issue underwriting, there's no medical exam and the underwriter won't ask you any medical questions. Because you skip those steps, the process of getting approved for an underwritten insurance policy is much quicker. However, some underwriters may require that you disclose any medical conditions since those details can still affect your overall policy options. Its more costly price range usually offsets the convenience of this type of policy since you get to skip most of the typical underwriting process.

Contingent guaranteed issue

The contingent guaranteed issue underwriting requires that a customer answer only a few medical questions to determine the policies they qualify for. However, their eligibility is also contingent on some additional action to take, like purchasing an extra policy for a member of their family. For example, you may be able to get an insurance plan for your spouse if they havent been in an accident or gone to the hospital recently, but this proposition is contingent on you buying a policy for yourself too.

Conditional guaranteed issue

In the conditional guaranteed issue underwriting process, you may answer a few questions about your medical history and conditions. There are no additional actions to perform in this type of underwriting. However, disclosing pre-existing conditions may still be necessary depending on the policies of the insurance agency and underwriter.

What are the primary functions and duties of an underwriter in insurance?

An insurance underwriter is a professional who uses mathematical assessments, historical records and risk analysis methods to determine what insurance policies their customers qualify for and what the terms of those policies may be. Their knowledge allows them to determine how much coverage to provide and in cases, not provide any coverage to a customer at all if they're too much of a risk for the insurance provider. Insurance underwriters use computer software and specialised programs that help them create logical blueprints of a patient's potential risk factors, like their medical conditions and driving history.

They perform other duties as well, such as:

  • Using insurance applications to analyse a client's information

  • Identifying the risks of providing a customer with insurance

  • Screening insurance applications using set guidelines and preliminary criteria, like surveys and questionnaires

  • Interpreting the recommendations of an underwriting software

  • Deciding what type of insurance premium to offer to a client

  • Determining the amount that the insurance company can cover for a customer

  • Gathering pertinent information about a patient

  • Reviewing and updating a customer's insurance policy

Related: What Are Analytical Skills and Why Are They Important for Employment?

What is the underwriting process in insurance?

Here are the steps in a standard insurance underwriting process:

  1. Receive the application: First, the customer fills out an application for a type of insurance that they want. They provide basic information about their health and physicality, including habits like smoking, drinking and exercising. An applicant's family medical history may be disclosed as well.

  2. Perform a medical examination and questionnaire: Second, the underwriter has the applicant perform a medical exam with a professional. They also complete a questionnaire about their current medical conditions and may need a statement from their primary physician.

  3. Obtain a report of the client's vehicle history: Third, the underwritten then needs a motor vehicle report to identify if the applicant has any tickets or citations that make them a safety risk to the insurance provider.

  4. Review the information: After gathering all of the necessary information and data, the underwriter puts all the information into highly specialised actuarial tables and programs to help them assess their applicant's risk and liabilities.

  5. Determine the applicant's insurance classification: Considering all the details, the underwriter then presents the applicant with the insurance plans they qualify for based on their classification. Starting from the most ideal, these classifications include preferred plus, preferred, standard plus, standard and substandard.

Read more: Detail-Oriented Skills: Definition and Tips

Skill requirements for insurance underwriters

Here are the most important skills that insurance underwriters require to perform their job successfully:

  • Computer competency: They may have a firm understanding of how to operate computers and underwriting software.

  • Mathematics: Underwriters use maths to help them determine an applicant's risk probability. If the numbers show a customer is too risky, then they may offer them a costly premium or none at all.

  • Critical analysis: Insurance underwriters need critical analysis and thinking skills to gather relevant and accurate information from the data they receive.

  • Detail-oriented: This skill helps them use every detail of the underwriting process to make a proper assessment of the applicant's qualifications.

FAQs about underwriters in insurance

Here are some frequently asked questions about underwriters in insurance:

Is insurance underwriting a good career?

Working as an insurance underwriter is a good career, but whether you find the work to be fulfilling depends on your own personal career goals, interests and competencies. This is a career that requires long hours sitting at a desk and looking at a computer screen and typing. There's also maths involved and a significant amount of time requires writing up policies, reports and client qualification assessments. If these are job aspects that appeal to you, then this is a career that is worth your consideration.

What is the average salary of an insurance underwriter?

The national average salary for an insurance underwriter is $52,775 per year, though this is an estimate that is likely to vary from city to city. Other factors that can influence an insurance underwriter's pay are their educational achievements, geographical location, employer, certifications and working experience. As you gain more experience, you may be able to use your expertise to negotiate for better pay.

Related: How To Negotiate a Salary (With Examples)

What is an insurance underwriter work environment?

Insurance underwriters work indoors within the comfort of office spaces. However, they may occasionally travel to meet with high-profile clients to convince them to sign up for an insurance plan. Most underwriters work independently and autonomously on computers at their desks. They require little to no supervision, and some may work remotely from home. They interact with customers and help them with their insurance inquiries. These professionals usually work full time during normal business hours, though may occasionally work weekends or nights to complete work during peak seasons or for important clients.

How long does it take to become an insurance underwriter?

It can take somewhere between four to six years to start working as an insurance underwriter. However, there are several factors to consider that can affect this general estimate. For example, most employers require a four-year undergrad degree, which you may be able to complete in three years depending on how many classes you take each semester. Whether you're a full time or part-time student can also affect this estimate. Working an internship while in university can expedite your job opportunities if you network with professionals who offer you a job with their firm.

What is the difference between an insurance underwriter and an actuary?

Insurance underwriters and actuaries have a similar role in the insurance industry by helping companies determine a customer's qualifications for coverage. Despite this overlap, there are some prime differences to consider. The actuary uses math to analyse the potential risk factors of a client and then creates a table of probability to determine how likely someone is to fall ill or get into an accident. In comparison, the underwriter serves as the connection between the customer and the actuary. They input the customer's information into the acutary's table to assess what kind of risk and insurance plans they qualify for.

Salary figures reflect data listed on Indeed Salaries at time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background and location.

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