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Underwriters

(D.O.T.  169.267-046)

Nature of the Work

Insurance companies assume billions of dollars in risks each year by
writing policies that transfer the risk of loss from their
policyholders to themselves.  Underwriters appraise and select the
risks their company will insure.  An insurance company may lose
business to competitors if the underwriter appraises risks too
conservatively, or it may have to pay more claims if the
underwriting actions are too liberal.

   Underwriters decide whether an applicant for insurance is an
acceptable risk.  They analyze information in insurance
applications, reports from loss control consultants, medical
reports, and actuarial studies reports that describe the probability
of insured loss.  They then decide whether to issue a policy and may
outline the terms of the contract, including the amount of the
premium.  Underwriters frequently correspond with policyholders,
agents, and managers about policy cancellations or other matters.
On rare occasions, they accompany sales workers on appointments with
prospective customers.  (Life insurance agents and brokers are
increasingly called life underwriters; they are included in the
statement on insurance agents and brokers elsewhere in the
Handbook.)

   Most underwriters specialize in one of three major categories of
insurance: Life, property and casualty, or health.  They further
specialize in group or individual policies.  Property and casualty
underwriters specialize by type of risk insured, such as fire,
homeowner, automobile, marine, property, or workers' compensation.
In cases where casualty companies insure in a single package policy,
covering various types of risks, the underwriter must be familiar
with different lines of insurance.  Some underwriters, called
commercial account underwriters, handle business insurance
exclusively.  They often evaluate a firm's entire operation in
appraising its insurance application.

   An increasing proportion of insurance sales are being made through
group contracts.  A standard group policy insures all persons in a
specified group through a single contract at uniform premium rates,
generally for life or health insurance protection.  The group
underwriter analyzes the overall composition of the group to be sure
that the total risk is not excessive.  Another type of group policy
provides members of a group a labor union, for example with
individual policies reflecting their needs.  These generally are
casualty policies, such as those covering automobiles.  The casualty
underwriter analyzes the application of each group member and makes
individual appraisals.  Some group underwriters meet with union or
employer representatives to discuss the types of policies available
to their group.

   Underwriters frequently correspond with policyholders, agents, and
managers about policy cancellations or other matters.

Working Conditions

Underwriters have desk jobs that require no unusual physical
activity.  Their offices generally are comfortable and pleasant.
Although some overtime may be required, the normal workweek is 35-40
hours.  Underwriters occasionally may attend meetings away from home
for several days.  Construction and marine underwriters often travel
to inspect work sites and assess risks.

Employment

Insurance underwriters held about 100,000 jobs in 1992.  The
following tabulation shows the percent distribution of wage and
salary jobs by industry.


Total...........................................................100

Insurance carriers.............................................. 61
  Fire, marine, and casualty insurance.......................... 40
  Life insurance................................................ 14
  Medical service plans and health insurance....................  4
  Pension funds and miscellaneous insurance.....................  3
Insurance agents, brokers, and service.......................... 32
Banks and credit agencies.......................................  5
Other industries ...............................................  2

   The majority of underwriters worked for insurance companies (or
carriers).  Most of the remaining underwriters worked throughout the
country in independent agencies firms which represent one or more
insurance companies and brokers firms which may deal with any
insurance company but represent none.  Small numbers of underwriters
worked for banks, mortgage companies, and real estate firms.

   Underwriters in the life insurance industry are most likely to work
in an insurance company's home office.  In some large agencies,
underwriters help life insurance agents determine if the risk will
be accepted or rejected by the home office.  However, most regional
life insurance offices deal predominantly with sales, not
underwriting.  Property and casualty underwriters also work in home
offices, but more work for agencies or regional branch offices,
where they have the authority to underwrite risks and determine an
appropriate rating without consulting the home office.

Training, Other Qualifications, and Advancement

For beginning underwriting jobs, many large insurance companies
prefer college graduates who have a degree in business
administration or finance, with courses or experience in accounting.
However, a degree in almost any field plus courses in business law
and accounting provide a good general background.  Basic familiarity
with computers is also needed.

   Some companies also hire persons without a college degree for
underwriter trainee positions.  In addition, some high school
graduates who begin as underwriting clerks may be trained as
underwriters after they demonstrate an aptitude for the work.  In
the property and casualty industry, ratings clerks sometimes advance
to underwriter jobs through their skill and experience in
researching risk and setting rates.

   Underwriter trainee or assistant underwriter is the typical
entry-level position for this occupation.  Beginners may help
collect information on applicants and evaluate routine applications
under the close supervision of an experienced risk appraiser.
Property and casualty trainees study claim files to become familiar
with factors associated with certain types of losses.  Many larger
insurers offer a training program, lasting from a few months to a
year, that combines study with work.  As trainees develop the
necessary judgment, they are assigned policy applications that are
more complex and have a greater face value.  These often require the
use of computers for more efficient processing.

   Continuing education is necessary for advancement.  Insurance
companies generally pay tuition for underwriting courses that their
trainees successfully complete; some also offer salary incentives.
Independent study programs for experienced property and casualty
underwriters are also available.  The American Institute for
Chartered Property Casualty Underwriters offers the designations
Associate in Underwriting (AU), and Chartered Property Casualty
Underwriter (CPCU).  Earning the AU designation usually requires a
year and a half and the completion of an examination covering course
material.  Earning the more advanced CPCU designation generally
takes about 5 years, and requires passing 10 examinations covering
such subjects as personal and commercial risk management, business
law, accounting, finance, economics, and ethics.  Although CPCU's
may be underwriters, the CPCU is intended for prospective managers.
An AU designation is sufficient for a career in underwriting.

   Underwriting can be a satisfying career for persons who like working
with detail and enjoy analyzing information.  In addition,
underwriters must possess good judgment in order to make sound
decisions.  They must also be imaginative and aggressive, especially
when they have to obtain information from outside sources.

   Experienced underwriters who complete courses of study may advance
to chief underwriter or underwriting manager.  Some underwriting
managers are promoted to senior managerial jobs.

Job Outlook

Employment of underwriters is expected to increase about as fast as
the average for all occupations through the year 2005.  Most job
openings, however, are expected to result from the need to replace
underwriters who transfer to other occupations or stop working
altogether.

   A number of factors underlie the continuing need for underwriters.
Shifts in the age distribution of the population will result in an
increase in the number of people who assume career and family
responsibilities.  People in this group have the greatest need for
life and property and casualty insurance.  A growing demand for
insurance coverage for working women also is expected.  In addition,
expanding long-term healthcare and pension benefits for retirees an
increasing proportion of the population will increase underwriting
requirements.  Growing concerns for financial security and liability
should also contribute to demand for more insurance protection for
homes, automobiles, pleasure craft, and other valuables.  New or
expanding businesses will need protection for new plants and
equipment, product liability, and insurance for workers'
compensation and employee benefits.

   On the other hand, the trend toward self-insurance is expected to
lower the demand for some property and casualty underwriters.
Businesses who self-insure set a rate for their own company and pay
premiums into a reserve fund.  Additionally, many property and
casualty companies are foregoing personal lines of insurance
especially automobile and concentrating on commercial lines of
business.  Demand for health insurance underwriters should be lower
if national health insurance legislation reduces insurers' freedom
to refuse coverage to high-risk individuals.  Underwriters
specializing in one particular area of insurance may find it
difficult to transfer to another type of insurance if their jobs are
threatened.

   Since insurance is usually regarded as a necessity, regardless of
economic conditions, underwriters are unlikely to be laid off
because of a recession.

Earnings

The following tabulation shows the median salaries of casualty and
property underwriters in 1991, according to a survey by the Alliance
of American Insurers in collaboration with the American Insurance
Association and the National Association of Independent Insurers.

Underwriters of personal lines
  Entry level................................................$25,000
  Intermediate level........................................  32,200
  Senior level..............................................  40,400
  Supervisor................................................  45,300
  Manager...................................................  61,000

Underwriters of commercial lines
  Entry level...............................................$28,000
  Intermediate level........................................ 32,800
  Senior level.............................................. 40,600
  Supervisor................................................ 45,500
  Manager................................................... 61,000

Most insurance companies have liberal vacation policies and other
employee benefits.  Almost all insurance companies provide
employer-financed group life and retirement plans.

Related Occupations

Underwriters make decisions on the basis of financial data.  Other
workers with the same type of responsibility include auditors,
budget analysts, financial advisors, loan officers, credit managers,
real estate appraisers, and risk managers.

Sources of Additional Information

   General information about a career as an insurance underwriter is
available from the home offices of many life insurance and property
and liability insurance companies.  Information about the insurance
business in general and the underwriting function in particular also
may be obtained from:

   Society of Chartered Property and Casualty Underwriters, Kahler
Hall, P.O.  Box 3009, 720 Providence Rd., Malvern, PA 19355-0709.