Want a job that will provide challenge and risk? Try insurance underwriting.
"Underwriting is a key position," says Todd Blandin, director of product marketing for LOMA, an insurance industry trade association. "If an underwriter makes a mistake, it could affect 20,000 policies. If the company loses $500 on each policy, the underwriter has made a $10 million mistake."
More Than Crunching Numbers
So who are these professionals who protect company finances? Underwriters use math and analytical skills to determine what insurance companies should charge policyholders.
Typically, underwriters start and stay within a trade line -- property, health or life insurance -- and work with group or individual plans. New underwriters begin by doing routine work like collecting customer data and analyzing customer applications.
"As you become more skilled, you'll be exposed to more and more complex cases," says Barbara Hastie, CLU, director of underwriting for the group insurance division of Prudential Financial in Livingston, New Jersey. "Every company has its own titles, but you have inexperienced underwriters and a middle-experienced group of senior underwriters. When you get to that level, you're dealing with more complex cases and you get into the technical aspects of the insurance."
Within underwriting, the professionals focused on the technical side are subject-matter experts who know an insurance niche such as marine, liability or workers' compensation. The most junior underwriters typically have either business experience that relates to underwriting or a college degree in finance or economics. However, even liberal arts graduates can become underwriters if they've taken business, accounting and math classes.
Still, underwriters need more than subject-matter knowledge and a math background. The best underwriters are outgoing and analytical, Hastie says. "You have to be curious and have a strong personality so when you're challenged on how you underwrote, you're able to articulate how you developed your rates and how you designed the plans," she says. "You have to be able to explain the plan so clients understand why one feature might be better than another."
Relationship-building skills are also extremely important in underwriting, says Jenny Cox, a senior underwriter at State Farm Insurance. "Underwriters operate as the main link between an insurance company and insurance agents," she says. "Maintaining this connection allows an underwriter to become the agents' trusted advisor. In an environment where agents/producers are required to sell and understand multiple lines of insurance and financial products, the underwriter is there to provide guidance and expertise."
A Peek at the Paychecks
What kind of compensation will this hard work earn you? In May 2010 there were about 95,000 underwriters working in the US, earning a median salary of $59,290, according to Bureau of Labor Statistics data. The lowest 10 percent earned $36,700, while the highest 10 percent earned more than $102,500.
Moving Up the Ranks
David Medvidofsky, CPCU, vice president of The Main Street America Group in Keene, New Hampshire, took a common career path in insurance underwriting. He was an underwriter for two years, then a senior underwriter and then a supervisor.
"I went to work in product development for a couple of years, then came back as a regional underwriting manager," he says. "From there, I went into operations."
Continuing education and certification gave his career a critical boost. "Having aspirations for other positions within the company got me started with the Chartered Property Casualty Underwriters [CPCU] designation," Medvidofsky says. The CPCU is conferred by the American Institute for CPCU, and it's not an easy designation to earn. "It took me five years -- taking two exams a year -- and I was studying about an hour a day for those five years," Medvidofsky says. In addition, some industry certifications and courses, such as LOMA's, count toward undergraduate or graduate-level credits.
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