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What Is an Underwriter?

Obtaining insurance and making financial investments comes with some level of risk. Underwriters are business professionals who evaluate the risks you鈥檙e looking to take to either approve, deny or modify your request. 

Underwriters play critical roles in various fields like finance, insurance and investment banking, where their responsibilities as risk assessors can protect their institutions. Specifically, denying a client who presents a risk can save businesses by preventing losses and ensuring profitability. 

If you鈥檙e interested in becoming a business professional who protects institutions from potential risks, a career as an underwriter might be the perfect fit for you. This underwriter career guide is your one-stop shop for all you need to know. We expand further on the question, what is an underwriter, while also walking through skills, education, types of underwriters and more.  

What Does an Underwriter Do?

With a role that wears many hats, you might be wondering, just what does an underwriter do? The details of their daily responsibilities vary based on what type of underwriter they are, but regardless of type, their duties include:

• Reviewing documents like loan, insurance or mortgage applications to assess risk (also referred to as an underwriter evaluation). 
• Using risk evaluation practices to determine approval or denial of applications. 
• Analyzing data, reports and financial information. 
• Conducting compliance reviews to ensure policies are executed correctly. 
• Managing policy approval processes.  

Types of Underwriters

Because they work in various settings, there are specialized underwriter career paths you can follow based on their preferred environment. Here鈥檚 a quick look at various underwriter roles:

Insurance Underwriters

Insurance companies, especially those with private plans, leverage underwriters to assess the risk of insuring a person or property. This kind of risk management is how the insurance industry practices loss prevention by protecting itself from clients whose needs may cost the company too much. 

There are subspecialties within insurance underwriting. For example, you might take on a property and casualty (P&C), commercial, or health and life insurance underwriter role. 

Regardless of specialty, their main responsibilities include:

• Risk assessment 
• Premium adjustments 
• Policy terms and conditions 
• Compliance 
• Continuous evaluation 

Mortgage Underwriters

When you need to borrow money from a financial institution to make a purchase, a mortgage underwriter, also known as a loan underwriter, conducts an application assessment. Further, they review a customer鈥檚 credit history, debt-to-income ratio and loan application to determine approval or denial. 

These professionals are not to be confused with loan officers, who support customers through the loan process while focusing on sales and service. 

Subspecialties within mortgage underwriting include residential mortgage underwriters and commercial mortgage underwriters. There are even more specialized opportunities, like credit or bond underwriters. 

Duties within mortgage underwriting include:

• Loan application review 
• Risk assessment 
• Information verification 
• Financial data analysis 
• Decision making 

Essential Skills for Underwriters

Underwriters in any sector or specialty must have a certain set of skills for success and effectiveness.

• Analytical and critical thinking: Interpreting complex documents and data is a significant part of an underwriter’s day-to-day responsibilities. 
• Attention to detail: Precision is of the utmost importance because small errors in applications can lead to inaccurate risk assessments. 
• Decision-making: Approving, denying or modifying applications and determining risk requires confident, informed decisions. 
• Communication: From agents and brokers to clients, it鈥檚 paramount to be able to problem-solve and collaborate. 
• Problem-solving: Applications don鈥檛 always meet criteria for various reasons, requiring an ability to find creative solutions that work for the business and client. 
• Negotiation: In some cases, negotiating applications and contract terms is key to reaching mutually acceptable agreements. 
• Technological proficiency (e.g., underwriting software, data analysis tools): A deep understanding of appropriate software is invaluable to executing efficient and accurate underwriting processes.  
• Ethical judgment: Compliant processes help prevent bias and unethical practices. 

Education Requirements for Underwriters

When it comes to how to become an underwriter, you鈥檒l first need to meet education requirements that not only qualify you for the job but also prepare you to be great at it. 

• 叠补肠丑别濒辞谤鈥檚 degree (optional): Choose from business specialties like finance, business administration, economics, accounting or another relevant field. You鈥檒l want to make sure the program includes coursework in statistics, accounting, business law and risk management. Some employers will accept relevant work experience and computer proficiency in exchange for a degree. 
• On-the-job training: Gain experience in an entry-level role or internship. Learn from experienced underwriters who are willing to serve as mentors. 
• 惭补蝉迟别谤鈥檚 degree (optional): Equip yourself for career advancement with a graduate-level degree. Many underwriters opt to complete an MBA. 
• Specialized certification: Boost your resume and standout to employers with the Chartered Property Casualty Underwriter (CPCU) certification. 

Underwriter Salary and Job Outlook

An underwriter’s salary often depends on specialization and experience. However, the average annual wage is $79,880.* Most recently, the industry is becoming more flexible with work arrangements, so you may find roles that are either fully remote or hybrid.

The evolution of automation and artificial intelligence allows underwriters to leverage advanced tools to streamline risk assessments and improve decision making. Of course, they still make critical contributions that require human touch. 

Approximately 8,200 openings for underwriter roles per year are predicted between 2024 and 2034.* Career advancement is robust, with opportunities to move into senior underwriter roles, management or executive leadership, as well as transitions into related fields like risk management, compliance or financial analysis. 

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