Written by Seamus McKale

Reviewed by Daniel Mirkovic

Updated June 21, 2024 | Published January 31, 2022


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.

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.

What is an insurance underwriter?

In insurance, an underwriter may be one of two things:

  1. A party that takes on risks from other parties in exchange for a premium — like an insurance company.
  2. A person who works in the insurance company’s underwriting department.

In this article, we’ll talk about underwriter as a job position, and what a day in the life of an insurance underwriter might look like. Keep in mind, we’re talking about underwriters in the insurance world, but there are many types of underwriters in the world. For example, mortgage underwriters helping evaluate the relative risk of mortgage loans. Or a securities underwriter, who works in the financial sector gauging the risk of investing in IPOs and setting an appropriate price for the offering.

For the big-picture definition of how underwriting works in insurance, check out our definition of underwriting. Now, let’s talk about a career as an insurance underwriter.

What does an insurance underwriter do?

To analyze risks and help the insurance company stay profitable, underwriters have several jobs.

First, they develop the company’s underwriting guidelines. These are general rules that new customers must follow if the company is to offer them an insurance policy. There are tons of factors in any underwriter’s guidelines, but generally they’re designed to include as many potential customers as possible. For example, in home insurance, any well-maintained home with relatively modern systems should fall within most companies’ underwriting guidelines.

If a house doesn’t meet all the guidelines, it doesn’t mean the application gets denied outright; it just means that an underwriter will review the application personally before accepting or denying it.

That’s another task an underwriter performs: reviewing policy applications to decide if they’re going to be acceptable for the company.

If a house meets most of the guidelines, the underwriter will often still accept the application and issue a policy. They may, however, include some additional conditions or higher rates to account for the increased risk..


Cameron’s house is located on a known floodplain. Homes in the area suffer some degree of flood damage every 10-15 years, give or take. As such, Cameron has had a challenging time finding insurance coverage for their home. Finally, one insurance company agrees to at least look at it.

In the company’s underwriting department, underwriter Jasmine determines that Cameron’s house is perfectly within their underwriting guidelines, except for the flood risk. She would like Cameron’s business, so she comes up with a compromise: she will issue Cameron a homeowner’s insurance policy, but will add an endorsement that imposes a $10,000 deductible for any flood-related claims. That means Cameron must pay the first $10,000 of any repairs for flood damage, instead of the normal $1,000 standard deductible that applies to other types of loss. Having had no luck getting a policy elsewhere, Cameron is happy to accept this compromise.

In this example, the underwriter weighed the risk of insuring a home, and decided that the risk was worthwhile as long as she could address the high risk of flood damage. Her solution was to impose a high deductible for flood damage. The higher deductible leaves a portion of the flood risk with the customer, making the home more reasonable for the insurance company to cover.

One more important task that underwriters perform is creating the insurance company’s policy wordings. Insurance companies don’t write a new-from-scratch policy for every customer. Instead, they have a basic contract that they use for everyone, and modify sections here and there based on each customer’s selections. They may also add endorsements, which are special modifications tacked on to policies on a case-by-case basis that add, remove, or change coverages within the main policy.

Underwriters write the basic contracts and the endorsements. The contracts are based on the underwriting guidelines and describe exactly what the underwriter intends for the insurance company to cover (and not cover).

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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 have 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, 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.

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: Daniel Mirkovic

A co-founder of Square One with 25 years of experience in the insurance industry, Daniel was previously vice president of the insurance and travel divisions at the British Columbia Automobile Association. Daniel has a bachelor of commerce and a Master of Business Administration (MBA) from the Sauder School of Business at the University of British Columbia. He holds a Canadian Accredited Insurance Broker (CAIB) designation and a general insurance license level 3 in BC, Alberta, Saskatchewan, Manitoba and Ontario.


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