OVERVIEW
What is an Underwriter?
Underwriters are financial specialists who use their knowledge and expertise to assess an applicant’s information and determine if giving a loan or insurance policy will benefit the company the underwriter works for. They undertake a client’s risk for a fee, which often takes the form of a commission, premium, spread, or interest, and are accountable for the loss if a contract is too risky and affects the company in a negative way.
As an aspiring underwriter, there are different specialties you can explore in your field. The most common types of underwriters include:
- Mortgage underwriters ensure that a loan applicant meets all income, credit, and debt ratio requirements, and then decide to approve or deny a loan. They also review a property's appraisal to make sure it’s accurate and that the home is worth the loan amount.
- Insurance underwriters act as a go-between for insurance companies and insurance agents. They evaluate insurance applications, advise on risk management issues, determine coverage amounts and premiums, and review existing clients for continued coverage analysis.
- IPO underwriters are IPO specialists who typically work for investment banks. They work closely with a company to issue stock on the public markets and ensure that the company meets all regulatory requirements.
- Loan underwriters work closely with loan officers, investors, and clients to process loan applications. They determine a client’s qualifications and ensure that the loan isn’t too risky.
RESPONSIBILITIES
What Does an Underwriter Do?
Underwriters can have different responsibilities depending on the industry they work in. In general, their job is to analyze an applicant’s financial information and determine the level of risk involved in a transaction. A typical underwriter job description might include:
- Investigating an applicant’s credit history and assets.
- Verifying an applicant’s income and employment.
- Looking at an applicant’s debt-to-income ratio.
- Verifying an applicant’s down payments and savings.
- Preparing risk assessment reports.
- Making decisions to accept, modify, or reject an application.
- Analyzing statistical data using specialized computer software.
Underwriters play an important role in any industry they work in. For instance, investors rely on underwriters to determine if a business risk is worth investing in. In this case, underwriters can directly contribute to the success of a company’s sales.
How to Become an Underwriter
If you’re looking for a job in finance and consider yourself highly analytical and detail oriented, then underwriting might be an ideal career for you.
Simply put, an underwriter looks at a person’s finances on behalf of a lender and assesses how much risk a lender will take on if they decide to provide a loan. This career path offers a variety of specialties, plenty of opportunities for advancement, and above-average salaries.
EDUCATION & BEST DEGREES
How Do I Become an Underwriter?
There are a few steps you’ll need to complete on your path to becoming an underwriter. While the requirements can vary based on what type of underwriting you want to do, these are the most common steps:
Step One: Earn your Degree.
The first step to becoming an underwriter is to earn a bachelor’s in accounting, finance or another related degree. If you already have a bachelor’s degree, then a Master of Business Administration degree can take your underwriting skills even further and help you on the path to becoming a senior underwriter.
Step Two: Consider Certifications.
While certifications aren’t required to become an underwriter, they can help you stand out to employers as you look to start or advance in your underwriting career. These are some of the most common underwriting certifications:
- Chartered Property Casualty Underwriter (CPCU) - The CPCU is a professional certification issued by The Institutes. This certification is designed to help underwriters meet the changes and challenges of a demanding risk management and insurance marketplace.
- Certified Residential Underwriter (CRU) - The CRU is offered through the National Organization of Mortgage Underwriters (NAMU) and is for those who want to specialize in residential underwriting. You must complete three levels of experience to become a CRU. The first level requires one year of experience, the second level two years and the third level four years of experience.
- Registered Professional Liability Underwriter (RPLU) - The RPLU certification is recommended for anyone who wants to work in the field of professional liability. Provided by the Professional Liability Underwriting Society, the goal of the RPLU is to give you a broad understanding of the key professional liability disciplines.
Step Three: Apply for Jobs.
After earning your bachelor’s degree, you can start applying for entry-level underwriting positions. Aspiring underwriters can find jobs in several industries in the financial world, including the insurance industry, mortgage industry, brokerage firms, equity markets, and more. It’s common for new underwriters to receive on-the-job training, working with a senior underwriter to learn industry and company-specific practices.
Best Degrees for an Underwriter
Business
Business Management – B.S. Business Administration
Hone your business acumen and garner added respect:...
Hone your business acumen and garner added respect:
- Time: 61% of graduates finish within 19 months
- Tuition: $3,755 per 6-month term
- Courses: 40 total courses in this program
Skills for your résumé this program will teach you include:
- Business communication
- Product development
- Decision making models
- Project management strategies
- Budgeting for business
This online degree program is an excellent choice for kick-starting your organizational management career.
Business
Finance – B.S.
This online finance program is career-focused so you will gain relevant...
This online finance program is career-focused so you will gain relevant industry skills.
- Time: 62% of graduates finish similar programs within 24 months
- Tuition: $3,575 per 6-month term
- Courses: 41 courses in this program
Some careers and jobs this business degree will prepare you for:
- Management
- Accounting
- Finance
- Spreadsheets
- Financial Analysis
- Problem Solving
The competency-based model at WGU allows you to move as quickly as you can master the material, and do your coursework on your schedule. Flexibility is key with the B.S. in finance at WGU.
Business
Accounting – B.S. Business Administration
Have a knack for numbers or fine-tuning finances?...
Have a knack for numbers or fine-tuning finances?
- Time: 62% of graduates finish within 24 months
- Tuition: $3,755 per 6-month term
- Courses: 41 courses in this program
Skills for your résumé you will learn in this program include:
- Accounting
- Finance
- Financial Statements
- Communication
- Detail Oriented
- Research
Take your first step toward CPA certification and learn how to use GAAP, ledgers, and journals.
Business
Accounting – M.S.
Become better qualified to pursue a greater variety of public and private...
Become better qualified to pursue a greater variety of public and private accounting positions:
- Time: 62% of grads finish within 19 months.
- Tuition: $4,755 per 6-month term.
- Courses: 10 total courses in this program
Skills for your résumé that this program will prepare you for:
- Accounting
- Auditing
- Tax Planning
- Financial Management
- Online Communication
- Research
This MAcc program is designed to prepare you for the CPA exam and also the CMA or CIA exams.
Business
Master of Business Administration
The flexible MBA program you need, focused on business management,...
The flexible MBA program you need, focused on business management, strategy, and leading teams:
- Time: Graduates can finish in 12 months
- Tuition: $4,755 per 6-month term
- Courses: 11 total courses in this program
Skills for your résumé you will learn in this program include:
- Leadership strategies
- Talent management
- Communication
- Data collection and interpretation
- Financial statements
Our competency-based model gives you an innovative learning experience you won't find anywhere else—and our MBA grads tell us they loved accelerating their program to see a faster ROI.
How Much Does an Underwriter Make?
$72,568
The national average annual salary for underwriters is $72,568, according to Glassdoor, with salaries ranging from $62,000 to $103,000. Your exact salary will vary depending on education, years of experience, and location. Having certifications, advanced degrees, or experience or education in finance can also affect your earning potential.
What Is the Job Outlook for an Underwriter?
2% Decline
According to the U.S. Bureau of Labor Statistics (BLS), employment of insurance underwriters is projected to decline by 2% from 2020 to 2030. Despite declining employment, about 8,300 openings for insurance underwriters are projected each year, on average, over the next decade.
Data by Career Explorer projects that underwriters with a background in accounting or finance and strong computer and analytical skills will be the most in demand. This will be evident in new and emerging fields of insurance, which are expected to be the source of many new jobs for underwriters..
SKILLS
What Skills Does an Underwriter Need?
Underwriters use their analytical and strategic thinking skills to determine risk for lending or insuring. They have a meticulous attention to detail, good negotiating skills, and are comfortable working under tight deadlines in a fast-paced environment.
- Math skills. An understanding of statistics and probabilities are the most relevant math skills needed for underwriters.
- Communication skills. You’ll need to be able to communicate the results of your findings clearly and accurately to your team, clients, and other financial professionals.
- Computer skills. A big part of this job involves using specialized computer software to perform risk assessments. It’s important that you have basic computer skills to learn these programs.
- Attention to detail. In order to make accurate assessments, it’s important for underwriters to be as precise as possible when reviewing an applicant’s information.
- Deep knowledge of underwriting regulations. This includes federal regulations and the best practices of insuring or lending institutions.
Underwriters typically gain these skills in a bachelor’s degree program and through on-the-job training.
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