Underwriter

Reviewed by Stefan Tirschler

Updated September 12, 2022

Noun

un·der·wri·ter | ˈʌndɚˌraɪtɚ

Definition: An employee who performs underwriting functions for an insurance company.

She was excited to begin her new job as an underwriter for one of the province’s largest insurance companies.

What is an underwriter?

Underwriter can refer to a couple of things:

  1. A party that takes on risks from other parties in exchange for a fee—like an insurance company.
  2. The job title “underwriter,” meaning someone who works in the underwriting department of an insurance company (or other financial business).

Often, the underwriting company of an insurance policy is different than the company selling the policy. The underwriter of a policy is the company accepting the risk and agreeing to pay any claims that arise. For example, The Mutual Fire Insurance Company of British Columbia underwrites policies sold by Square One. Many large insurance companies underwrite their own policies.

To learn more about the big picture of how underwriting works for insurance companies, check out our definition of underwriting.

In this article, we’ll talk about underwriter as a job position, and what an underwriting career entails. Keep in mind, we’re talking about underwriters in the insurance world, but mortgage lenders and investment companies also have underwriting departments that perform similar functions.

What does an underwriter do?

The underwriting department in an insurance company analyzes risks and decides which risks the company should take—plus how much they need to charge in order to have the money to pay for claims (without going bankrupt).

Underwriters are related to actuaries, another specialist role within insurance companies. While actuaries are primarily data analysts, underwriters decide what to do with the data.

A big part of an underwriter’s job is making sure the insurance company stays profitable. On one hand, that means analyzing risks and deciding which are acceptable and which are not. On the other hand, it also means trying to build a large and stable portfolio of customers—which means adjusting policies to work for both the insurer and their potential customers.

To sum up, underwriters:

  • Implement the insurer’s underwriting guidelines.
  • Review insurance applications and decide if the customer meets the guidelines.
  • Apply the rates the company charges for coverage.
  • Create policy documents, including any modifications required for individual customers.

Of course, an individual underwriter might not do everything, especially in a large insurance company. They’re likely to have many folks in their underwriting department working in various roles.

While sometimes the job title is simply “underwriter,” positions within the underwriting department may also have titles like underwriting specialist, underwriting analyst, underwriting assistant, and so forth.

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How do you become an underwriter?

To become an underwriter, you could first earn a bachelor’s degree in statistics, finance, economics, or a similar field. There are a number of industry certifications that one might wish to earn as an underwriter, like the Chartered Insurance Professional designation, for example.

However, it’s becoming more common for insurers to recruit underwriting staff from diverse educational backgrounds. If someone is to underwrite something, it makes sense that they should have a strong understanding of that something.

For that reason, underwriters may also come from fine art or historical backgrounds (if insuring art or collectibles), gastronomy or oenology (if insuring wine collections), or just about anything else. If you look hard enough you can find insurance for nearly anything, and so there’s a need for diverse knowledge in the underwriting world.

Underwriting is a job that requires strong analytical skills. An aspiring underwriter should also have a keen ability for strategic thinking and confident decision making. Finally, as underwriters often deal with customers’ personal information, personal integrity is a must.

To get started on the path to a career as an underwriter, one could also start with experience as an insurance agent or broker. Once someone’s hired as an underwriter, there’s plenty of on-the-job training, but a strong background in insurance goes a long way.

Even once you’ve found a job in underwriting, the work isn’t over; underwriters are expected to stay up to date by taking continuing education courses throughout their career (like any insurance professional).

Working as an underwriter is a good career for someone who’s interested in the insurance world and has an analytical bent. Underwriters typically make good salaries and have opportunities for advancement. Plus, there are all the benefits and stability that come with working for a financial company—insurance isn’t going anywhere any time soon, and the industry doesn’t work without the underwriting department.

The important points

  • Underwriters decide which risks an insurance company is willing to take, and how much they need to charge to cover those risks.
  • To become an underwriter, one could pursue a bachelor’s degree in finance, economics, or statistics, followed by gaining experience in the insurance industry.
  • A career in underwriting is typically stable and pays well, suited to people good at analytical thinking and decision making.

Looking for another insurance definition? Look it up in The Insurance Glossary, home to dozens of easy-to-follow definitions for the most common insurance terms. Or, get an online quote in under 5 minutes and find out how affordable personalized home insurance can be.

About the expert: Stefan Tirschler

Stefan is responsible for underwriting leadership, market expansion, and product research and development for Square One's operations. Stefan has earned his Fellow Chartered Insurance Professional designation, and maintains a level 2 general insurance license in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario. Stefan is also an Education Committee member and CIP/GIE instructor for the Insurance Institute of Canada.

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