Updated at: 07-03-2023 - By: Helen Skeates

Do you have an interest in learning the salary of an insurance underwriter? Of course, it varies by state, but nationally they earn about $61,500 a year. That works out to about $7.12 an hour or $5,125 per month. That’s a big deal, right?

Perhaps you have been on the lookout for a position that is somewhat relevant to your field of study, and this one has caught your eye. You have found the correct place, my dear friend.

When looking for a job, salary is an important factor to consider. But if you hate your job, no amount of money will make it worthwhile. This article will therefore examine not only the “amount of compensation” but also the “amount of responsibility” of an insurance underwriter.

What an Insurance Underwriter Is

Underwriters in the insurance industry are highly educated experts. They have extensive experience with risk assessment, analysis, and mitigation. They are able to decide whether or not to insure anything, and for how much, based on their expertise in assessing risk. The underwriter’s decision to accept financial responsibility for the insured in the event of a catastrophic event is a straightforward explanation of the concept of insurance.

Here's How Much Underwriters Make In Every State

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What an Insurance Underwriter Does

Typically, an underwriter will focus on one particular type of insurance, such as life, health, or P&C. Insurance for buildings, homes, and vehicles are all examples of property and casualty coverage. The core responsibilities of each position are same regardless of area of expertise. The U.S. Bureau of Labor Statistics provides the following description of an underwriter’s duties:

  • Reviewing insurance coverage requests Applicants’ potential risks are assessed in order to set premiums.
  • Applying a set of criteria designed to weed out unqualified candidates
  • Comparing software underwriting suggestions
  • Requesting additional information from field reps, healthcare providers, and others
  • Determining Whether Insurance Should Be Provided
  • Setting reasonable rates and levels of protection
  • Revision and amendment of the guidelines for automation software

What differentiates one field of expertise from another is the weight given to those criteria. Age and financial stability are two examples of characteristics used in life insurance underwriting. Health parameters mostly consist of age and medical history. Automobile insurance is categorized as property and casualty insurance, and underwriters evaluate potential clients based on factors such as driving history, age, and even the sort of car they intend to insure. Underwriters must always weigh the risks and benefits of their decisions. Insurance companies cannot afford to handle excessive claims. If they’re too careful, the insurance company won’t make enough money from premiums.

Where Insurance Underwriters Work

Underwriters are employed by insurance firms and might be located either in the company’s main office or in one of its regional hubs. It is true that underwriters spend most of their time at a desk, but they are nonetheless heavily reliant on computers and technology due to the nature of the work they do. In most cases, they put in 40 hours per week, although other types of underwriting may require them to put in more.

How Insurance Underwriting Works

Information about the client or application is entered into a computer system by an insurance underwriter. The algorithms will provide recommendations for coverage and rates based on the data, but ultimately it is up to the underwriter to decide whether or not to accept the application. The automated suggestions are usually sufficient for simple and common types of plans, such as auto or homeowner’s insurance.

They’ll need analytical expertise for policies with more nuanced details, such as workers’ comp or business revenue, or even for subtleties within relatively straightforward policies, like auto insurance. This may involve evaluating the application’s stated risks. A policy may be affected, for instance, by a policyholder’s disclosure of a bankruptcy or cancer diagnosis and treatment. They can look at things like credit reports and medical records to help make that kind of choice.

Health Insurance Underwriter Salary and Job Description

Requirements to Become an Insurance Underwriter

Solid decision making and math skills, strong analytical and computer skills, and good interpersonal skills are all necessary for success in the field of insurance underwriting. You also need to pay close attention to detail. An undergraduate degree is required at the very least. You don’t have to be a math or economics major, but you should still prepare for a career in finance and business. To become an underwriter, a license is not required, unlike for insurance agents or financial advisors who offer insurance as a financial product. However, holding an insurance license can set you apart from other trainees or associates applying to larger insurance companies.

In most cases, a new underwriter will need to work as an associate for an experienced one, shadowing them as they gain experience with fundamental applications and typical risk factors in the industry. They gain more independence and face greater challenges as they progress in their careers. In addition, new hires at large insurance companies should expect to participate in extensive training programs. They will be able to function as underwriters without further oversight at some point. Most underwriters keep their knowledge and expertise current through underwriting professional development programs.

A Great Way to Start Your Insurance Career

If you’re interested in a career in insurance, underwriting is a great place to start. Having received such valuable expertise and insight, many underwriters move on to become licensed insurance brokers. Applicants for associate underwriting roles may also benefit from holding a valid insurance license in the same line of business as their underwriting, whether it life or property and casualty. Visit our insurance education page and choose your state to learn more about insurance license and underwriting courses available in your area.

What Does An Insurance Underwriter Do?

Expert risk analysis is what insurance underwriters do best for their clients, whether they’re buying insurance or having it written on their property. The value of acceptable risk for insurance is determined by them. It’s implied by the job’s title that workers receive benefits in exchange for taking risks.

They use industry-specific algorithms and hard data to determine the scope and scale of the risk involved.

To put it another way, they speculate on the level of risk involved in a potential agreement with another party. One such occurrence is a fire. In exchange for first-class or standard reimbursement, they may be willing to assume the risk of the cost of such an incident, say if it occurred in one’s home.

Owners’ insurance underwriters are yet another case in point. Underwriters are agents that do in-depth research on the condition of a given property and then offer their findings to the insurance company. The insurance underwriter then typically includes substantial risks within the researched area that could hold the insurance firm liable.

Given that an imbalanced underwriting process can cost an insurance business millions of dollars, their work is crucial. A person with strong analytical skills is thus needed for this position. They shouldn’t be overly stringent in outlining the cost of hazards, as doing so could cause a decline in that figure. Neither should the situation be inverted, as that could force the corporation to shell out more cash.

Considering To Be An Insurance Underwriter?

An insurance underwriter can choose to work in a variety of fields. However, only three of those will be covered here. It’s important to keep in mind that the underwriter’s role will vary depending on the type of policy being written.

We’ll discuss several options you have as you enter this field after we answer our primary question, “How much do insurance underwriters make?”

Type #1. Life insurance underwriter

An underwriter in the life insurance industry works with policy applicants. Customers may wonder why they have to wait so long to get life insurance. The underwriting process is the primary driving force. A life insurance underwriter’s primary responsibility is to gather pertinent information about the client. You can expect your risk assessment for life insurance to be based on this information.

Each client’s fee will be calculated independently based on their individual profile. A person with harmful vices poses a greater threat to their employer than someone with no such vices. This indicates that the former group will pay more than the latter to maintain the same level of insurance protection.

Type #2. Medical underwriter

A medical underwriter is a specialist who investigates the client’s health history and other criteria linked to the client’s health in order to evaluate the client’s application for health insurance.

As an interesting fact, medical underwriting may be subject to legal constraints. So, there are cases in which the insurance provider might not be able to verify certain customer information.

The client’s risk variables, together with other data, will be used to determine the final health insurance premium. This data can also serve as the foundation for an application for health, life, or disability insurance.

How to Become a Medical Insurance Underwriter

Type #3. Mortgage insurance underwriter

Finally, we’ll think about a category that doesn’t focus too heavily on a person’s wellness or way of life. Risk assessment in lending money to a customer or business is the focus of mortgage insurance underwriting. It is prudent for a lending institution to verify the borrower’s financial stability before agreeing to extend credit. It should be highlighted that a mortgage officer is assisting with the project.

The officer is responsible for collecting all relevant information, which is then forwarded to the underwriter for validation. With this data in hand, the underwriter can pinpoint any and all potential causes for the borrower to default on the mortgage’s payments.

Final Words

As this essay draws to a close, I hope you have gained some insight into the salary of insurance underwriters. Thank you for making it this far in the article; we appreciate it. I really value you taking the time to read this.