INSURANCE UNDERWRITERS California Occupational Guide Number 55 Interest Area 11 1998
THE JOB
Insurance is protection against future financial loss from injury, illness, property damage, or liability for the losses of others. INSURANCE UNDERWRITERS review applications for insurance coverage submitted to the company. They evaluate the potential risk, and accept, reject, or modify the policy according to law or company standards. Some Underwriters work for life or health insurance companies and usually specialize in either individual or group policies. Others are employed in the property and liability field; they typically handle either personal insurance, such as automobile or homeowner policies, or commercial insurance.
Before deciding whether to accept or reject a policy, Underwriters investigate the factors affecting the probability of loss. They analyze information on the policy application and collect additional data. Life and health Insurance Underwriters study medical reports and also obtain detailed information about the applicant's occupation and involvement with hazardous sports or other risky activities. In addition, they apply actuarial tables which give the statistical probability of loss based on actual experience of large groups of people over many years. Underwriters dealing with automobile insurance check an applicant's driving record and customary use of the vehicle. For business property and liability policies, commercial Underwriters look into many aspects of a firm's operation; these include the physical condition of the property, protective devices and safety procedures used, and reports of safety inspections made by company loss control technicians or by independent inspection services. Underwriters in all fields of insurance also study credit reports and financial statements to determine the applicant's ability to make the insurance payments. During the review of renewal policies, they check the policyholder's claims record and may revise the amount of coverage.
After deciding that an applicant is an acceptable risk, underwriters usually determine the amount of the premium. Rates may be set according to standardized classifications published in rate manuals, or revised to reflect individual or group risk variations. Underwriters may also limit the coverage or modify other terms of the contract.
Underwriters frequently correspond with applicants, policyholders, agents, and branch managers about policy cancellations or requests for information. Some group Underwriters, along with Insurance Agents, attend meetings with union or employer representatives to discuss the types of policies available to their groups.
WORKING CONDITIONS
Life Insurance Underwriters usually work in the headquarters office of their company, while Casualty and Liability Underwriters may work in headquarters, regional, or branch offices, usually located in or near major metropolitan areas. Most offices are large, modern, and equipped with the latest office machines and computers. As a general rule, the industry provides good job security because most insurance is considered a necessity regardless of economic conditions. Underwriting is a complex, demanding, and responsible job. Underwriters use considerable judgment in appraising risks, and their decisions are seldom reviewed at a higher level. If Underwriters are too conservative or their rates are too high, the company may lose business to competitors. But if risks are not properly evaluated or standards are stretched too far, the company may have too many claim losses.
EMPLOYMENT OUTLOOK
The following information is from the California Projections of Employment published by the Labor Market Information Division.
Estimated number of workers in 1993 10,030 Estimated number of workers in 2005 12,300 Projected Growth 1993-2005 23% Estimated openings due to separations by 2005 2,700
(These figures do not include self-employment or openings due to turnover.)
Employment of Underwriters is expected to increase at a rate slower than the average for all occupations through the year 2005. More than half of all job openings are expected to result from the need to replace Underwriters who transfer to other occupations or stop working altogether.
The reasons for the continuing need for Underwriters are many: shifts in the age distribution of the population; growing demand for insurance coverage for working women; expanding long-term healthcare and pension benefits for retirees; growing concerns for financial security and liability for more insurance protection for homes, automobiles, pleasure craft, and other valuables; and new or expanding businesses.
Insurance companies typically fill openings for Underwriters by hiring trainees. Company representatives go to college campuses to select qualified college graduates. They report that there usually are far more applicants than trainee positions available. Employers are very selective, and there is a good deal of competition for available jobs.
WAGES, HOURS, AND FRINGE BENEFITS
In California, the median hourly wage for Underwriters is $18.11. Fringe benefits include paid vacations, holidays and sick leave, group life and health insurance, retirement programs, and sometimes profit sharing plans. The workweek is normally 37-1/2 hours; overtime or evening work is rare.
ENTRANCE REQUIREMENTS AND TRAINING
Underwriting requires an analytical mind, attention to detail, good judgment, and decision-making ability. Although Underwriters deal primarily with facts and figures, they must also be able to communicate effectively, both orally and in writing, and must get along well with others.
Employers usually expect trainees to have a bachelor's degree, preferably in business administration or with emphasis on business subjects. Recommended courses include economics, accounting, statistics, commercial law, and insurance principles. Some employers start all trainees in support positions so they can learn each function thoroughly prior to being placed on the job doing actual underwriting work. Underwriters involved in commercial insurance are almost always expected to have both a degree and business experience.
Many schools offer courses in insurance and correspondence study programs are also available; however, insurance companies usually rely on their own training programs to teach Underwriters the basic job-related skills. Training programs combine formal classroom instruction and self-study workbooks with on-the-job training. It requires six months to two years or more to become a journey-level Underwriter, depending on individual performance and the complexity of the work. Most companies hold special seminars to keep experienced Insurance Underwriters up-to-date on new regulations, procedures, and changes in underwriting policy.
ADVANCEMENT
Continuing education is necessary for advancement. Advancement comes first in the form of increased underwriting authority in one type or line of insurance. The trend is to move away from narrow specialization. No longer does a Fire Underwriter sit at one desk and a Casualty Underwriter sit at another. Instead, in many companies, Underwriters may receive advanced training and become most proficient in one line but will also have full working knowledge of other lines of insurance. Senior Underwriters handle the most complex accounts or may advance to supervisory or managerial positions in branch, regional, or headquarters offices.
FINDING THE JOB
Many large companies recruit on college campuses. Trainee positions are also listed with college placement services, public or private employment agencies, and the California Employment Development Department Job Services. Direct application to company personnel departments is also recommended. Announcements of trainee openings are usually posted in insurance company offices.
ADDITIONAL SOURCES OF INFORMATION
Insurance Institute of America P. O. Box 3016 Malvern, PA 19355-0716 (610) 644-2100 www.aicpcu.org/
Insurance Information Institute 110 William Street New York, NY 10038 (212) 669-9200 www.iii.org/
RELATED OCCUPATIONAL GUIDES
Insurance Adjusters, Examiners & Invests. No. 67 Actuaries No. 318 Insurance Sales Agents No. 455
OCCUPATIONAL CODE REFERENCES
DOT (Dictionary of Occupational Titles, 4th Ed.,1991) Underwriter (insurance) 169.267-046
OES (Occupational Employment Statistics) System Underwriters 211020
Source: State of California, Employment Development Department,
Labor Market Information Division, Information Services Group,
(916) 262-2162
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