When thinking about insurance, you’ve probably heard of insurance underwriters, but what is an insurance writer, and what do they do? Underwriting is a much more involved process than you’re probably aware. We’ll be taking an in-depth look at the world of insurance underwriting, what the job description entails, and what it takes to do the job.
What is an Insurance Underwriter?
According to The Balance, insurance underwriting is the “behind the scenes work in an insurance company.” Underwriting involves evaluating the risk involved in insuring a home, car, or individual (in cases like life insurance) to see if it will be profitable for the company to insure them. After the risk is assessed, underwriters set prices and insurance premiums that are charged to the individual in question in exchange for the company taking the risk.
Insurance underwriters analyze information and determine whether an individual/party should be accepted or rejected. These people can find employment in a variety of areas, like insurance carriers or companies and independent insurance brokerage firms. Insurance underwriters can specialize in certain areas, like home insurance, car insurance, health insurance, or personal/life insurance. These jobs typically require an undergraduate degree, with courses that focus on areas like finance, accounting, computer literacy, and data analysis. By nature, more insurance underwriters possess an analytical and deep-thinking thought process.
What Does an Insurance Underwriter Do?
Insurance underwriters have many responsibilities. They are responsible for reviewing information that helps them determine risk and they determine what kind of policy is necessary to insure the individual/party after reviewing that information. Underwriters review all information, usually by using data analysis applications, and typically conduct credit/background checks.
According to the Bureau of Labor Statistics, insurance underwriters screen applicants, evaluate the recommendations that are given by using underwriting software, contact various people to obtain additional information, make decisions about offering insurance, and decide the proper premiums and amount of coverage for the party in question. These employees are also responsible for finding solutions that could reduce or eliminate the risk of future insurance claims.
Insurance underwriters are essentially the link between insurance companies and insurance agents. They use the information they are given and enter it into software that analyzes the risk of insuring the party. When the decision is not so cut-and-dry, underwriters may also consult additional sources to help make a decision. These people must be able to achieve a perfect balance between risky and cautious decisions. If underwriters make decisions that are too risky, the company may pay out too many claims. If the underwriter is too cautious in approving applications, the company will not make money.
Insurance underwriters must follow certain guidelines and approve or reject applications in a timely manner. For these reasons, they must be disciplined and able to work well by themselves on a timeline. Evaluating risk before the policy period and at renewal times is essential to the job.
Related Resource: What is a Senior Accountant?
Underwriting is a very involved process that requires analyzing endless streams of data. It involves the perfect balance between risk and caution. Insurance underwriters are the geniuses behind the scenes of the insurance companies that help decide which direction the company is going in by determining who should be insurance and for how much.
