Insurance Underwriter
Insurance underwriters analyse risks in order to set the terms and price of insurance policies. Risks are determined by the likelihood of a claim being made. Through careful assessments and detailed definition of insurance cover, underwriters calculate premiums to reflect potential losses. They are usually responsible for making the final decision on whether their company will take on the risk and at what premium. Clients may be individuals, companies and groups like charities. Most underwriters specialise in one product area, such as motor, household, travel or life insurance. In simple cases, underwriters can assess established statistical data, referring to ratings guides to underwrite the risk. They may also suggest methods to reduce risk, like installing anti-theft alarms and approved safety locks. For more complex risks, such as business insurance, they may underwrite a complete portfolio, covering damage to premises, stock, business interruption, personal liability, accidents and legal insurance. This involves meeting clients, gathering information about their claims history and security measures, and identifying the level of cover required.
As well as negotiating with clients and answering their enquiries, underwriters work closely with insurance brokers drawing up contracts. They may also liaise with other specialists, such as doctors or insurance surveyors, gathering reports and supporting documentation before preparing and writing insurance policies.
Entry level
There are no clearly defined entry routes for insurance underwriters. Many companies ask for two A levels/three H grades plus two GCSEs/S grades (A-C/1-3), including English and maths. Individual employers tend to set their own entry qualifications.
Direct entrants are often graduates, and a background or HND/degree in one of the following subjects could be useful: business/management, economics, law, finance, insurance or maths.
With GCSEs/S grades (A-C/1-3), including English and maths, it is possible to enter the profession via a clerical post, completing on-the-job training and studying for a vocational qualification in financial services before moving into an underwriting position.
Making the grade
Many employers offer comprehensive in-house training programmes, which may last up to two years, providing an insight into different departments, such as claims, accounts, underwriting and investment. This can be followed by up to another two or three years' training in a specialist area of risk. Training is mainly on the job, complemented by professional qualifications provided by the Chartered Insurance Institute (CII), the main examining body for the insurance industry.
The CII courses have been carefully designed to provide underwriters with a recognised qualification, from the most basic level through to Fellowship of the Institute. Studying is provided through day release, evening classes or distance learning.
The Institute of Financial Services provides additional qualifications, including the Certificate of Regulated General Insurance. Depending on the employer, some underwriters are encouraged to attend further external courses or in-house training, such as the Lloyd's Introductory Test, focusing on the Lloyd's of London market.
As your career develops, you may be promoted to more senior roles with more complex or greater risks and with greater responsibility. Promotion is on merit.
You may also transfer to other employers within the profession, or move into other insurance areas, such as claims, sales, broking or loss adjusting.
Personal qualities
As an insurance underwriter, you should be decisive and capable of justifying your decisions with sound and logical reasoning. You would need to adopt a detailed and methodical approach to your work, applying good research and analytical skills.
Good communication skills, both verbal and written, would be essential, together with sound numerical and IT skills. You must be discreet when handling confidential information and you must be able to work well under pressure.
Looking ahead
The insurance industry is constantly evolving through mergers and acquisitions. It is also highly regulated by the Financial Services Authority (FSA). Opportunities for underwriters within the large insurance companies tend to be focused around the major cities with a close proximity to major investment institutions. Due to an increased demand for quick and cost effective insurance cover, many organisations have call centre operations, where underwriters deal with simple day-to-day risks and assessments.
Graduate training schemes are offered by all of the large insurance companies. Prospects are good for those keen to advance up the professional ladder, although competition for graduate placements can be high.
Alternative suggestions
Other possibilities might include accountant, accounting technician, actuary, banking executive, financial adviser, insurance broker, investment banking or stockbroker.
Take-home pay
A typical starting salary for a graduate trainee would range from £16,000 to £20,000. This should increase with experience, increased responsibility and successful performance to £40,000 to £100,000. Professional underwriters at Lloyd's of London, who are different from 'underwriter members', can earn over £300,000.
Salaries can vary between employers and regions, and may include benefits such as subsidised mortgages and discounted insurance.
Effects
Normal working hours are 9am to 5pm, Monday to Friday, possibly extra during busy times. There are some opportunities to work part time. The job can be very challenging, with tight deadlines to meet and difficult decisions to make.
Sources of information
Chartered Insurance Institute: www.cii.co.uk
Financial Services Authority: www.fsa.gov.uk
Financial Services Skills Council: www.fssc.org.uk
Association of British Insurers: www.abi.org.uk
British Insurance Brokers' Association: www.biba.org.uk
International Underwriting Association: www.iua.co.uk
ifs School of Finance:: www.ifslearning.com
CRCI: IH
