How to Become an Underwriter

Fact checked by Michael LoganReviewed by Andrew SchmidtFact checked by Michael LoganReviewed by Andrew Schmidt

Underwriters are financial professionals who evaluate and assess whether a financial risk is worth taking. You can find underwriters in different parts of the financial industry, including lending, insurance, equity markets, and even security trading. Some help companies launch their initial public offerings (IPOs) while others review your credit or health insurance applications.

If this sounds like an exciting career path, you may be curious about the educational requirements and professional qualifications you’ll need. In this article, we look at what you’ll need to become an underwriter.

Key Takeaways

• An underwriter assesses and takes on another party’s risk in sectors such as debt and equity markets, mortgages, and insurance.
• You may need a bachelor’s degree that includes coursework in economics, business, accounting, finance, or mathematics to become an underwriter.
• Underwriting requires a series of specialized skills, including analytical, computer, communication, and math skills.
• New hires get on-the-job training from senior underwriters and must complete key certification programs to advance in their careers.
• You can work your way from an entry-level job up to a senior position with a higher salary within as little as five to 10 years.

Requirements to Become an Underwriter

There are a few things you’ll have to check off your list if you want to become an underwriter. The requirements often vary based on the subsector and the jurisdiction in which you work. We’ve listed some of the common steps you’ll have to follow on your road to becoming an underwriter.

Education

To become an underwriter, you typically need a bachelor’s degree. There isn’t a specific discipline (there’s no degree in underwriting) but courses in mathematics, business, economics, and finance are beneficial in this field as they can certainly translate to any of the work you’ll be doing. A good underwriter is also detail-oriented and has excellent skills in math, communication, problem-solving, and decision-making.

Although a university degree isn’t a requirement across the board, some employers may hire you if you have relevant work experience and computer proficiency. Keep in mind that if you want to become a senior underwriter or underwriter manager, you’ll need to become certified. We explore this a little further below.

Once hired, you typically train on the job under the supervision of senior underwriters. As a trainee, you learn about common risk factors and basic applications used in underwriting. As you become more experienced, you can begin to work independently and take on more responsibility.

Skills

Education isn’t the only thing that can help you advance in this field. Specialized skills can help you get your foot in the door and help you move up the ladder. Here are some of the key skills you’ll need:

• Analytical Skills: Underwriters must analyze credit applications and the risks associated with IPOs, securities trading, debt issues, and equity markets. This requires some basic knowledge of financial markets, the ability to make decisions, and balancing out risks and rewards.
• Communication Skills: Because underwriters make important assessments and decisions, they need to be able to communicate the results of their analysis to others in the field, including clients, colleagues, insurance agents, and other financial professionals.
• Computer Skills: Using computer software is an integral part of an underwriter’s job. This can be specific software that is tailored to your employer or sector or generic programs like Excel. Whatever software is used, it’s important that you come with some basic computer skills and are able to learn how to navigate some of the industry’s main programs quickly.
• Math Skills: Computers make our lives easy by making calculations quickly. But you should still be able to verify all the information on your own. That’s why it’s important to come to the job with math skills, which courses or a bachelor’s degree can help you attain.

Certifications

Most underwriter jobs don’t require you to get special certifications. But it certainly helps to get certified if you want to land your first role or get further in your career. There are three common ways to become certified as an underwriter, including:

• Chartered Life Underwriter (CLU): This certification is generally reserved for professionals who work in life insurance and estate planning. It provides individuals with skills that help them assess personal risk management and life insurance planning. They’re also equipped to provide estate, insurance, and business planning advice. 
• Chartered Property Casualty Underwriter (CPCU): Professionals who specialize in certain parts of the insurance industry can benefit from this certification, including risk management as well as casualty and property insurance. This certification is also geared toward insurance agents, claims representatives, and risk managers.
• Associate in Commercial Underwriting (ACU): This is intended for commercial insurance underwriters. These individuals review and analyze risks that arise from losses that stem from insurance used to protect against issues like illness, accidents, injuries, and damage.
• Associate in Personal Insurance (API): This designation is designed for insurance professionals. It focuses on personal lines insurance, which protects insured parties against personal injury, death, or loss of property.

Entry-Level Job and Training

One of the best ways to get into the field is through an entry-level job. These positions often offer on-the-job training, which helps you learn the intricacies of the field. This includes processes and procedures that are specific to the company and the industry in general. You’ll also be able to access and sharpen the computer skills that will help you advance in your career.

Important

Underwriters serve a variety of purposes and can help individuals and businesses alike. For instance, underwriters can help investors understand the risks of certain investments and they can help contribute to the financial success of companies.

Career Paths

As noted earlier, there are many positions you can take in your career as an underwriter. It all depends on which part of the industry you work in and the company that employs you. Knowing where you start can also help you figure out where you may end up later in your career. Each path also has a different timeline from entry-level to management jobs.

You can expect to work 40 hours per week as an underwriter on a quiet week, and as many as 60 or 70 hours per week when big deals are underway. Most professionals work in an office, but as with many industries that had to adapt to the COVID-19 pandemic, some employees work remotely. You may also be expected to travel to certain locations, such as worksites, to make evaluations.

Mortgage Underwriters

You may start your career as a mortgage underwriter. In this position, you help the lender assess whether the borrower will repay their loan and ensure there is enough collateral in the property if the homeowner defaults. From there, you may move up to become a senior underwriter in your division before you become an underwriting manager. This process can take as long as a decade.

Credit Analysts

Another path may see you begin your career journey as a senior credit analyst where you analyze the creditworthiness of individuals and businesses. Once your assessment is complete, you decide whether your company should extend any credit to the applicant. You can move up the ranks to become a credit manager before taking on the role of senior credit manager. It can take anywhere between five to seven years to reach a senior level.

Investment Industry

What if you want to work in the investment industry? You may start as an account manager and work for a decade to become vice president and portfolio manager of an investment firm. Account managers can also become controllers, who are responsible for the financial health and integrity of a company.

Insurance Underwriters

Insurance brokers and other entities submit insurance applications for their clients, and insurance underwriters look over the application and make a decision on whether coverage will be offered. As such, insurance underwriters review applications for coverage and decide whether to accept or reject an applicant through the use of risk analysis.

Insurance underwriters also have other responsibilities, including advising on risk management issues, making decisions about coverage for individuals, and deciding whether existing clients should continue receiving coverage and at what level.

As noted above, you may want to get some certification to help you advance in your career. In some cases, your employer may require you to get certified as part of your training or to advance to a lead underwriter. Completing certification courses helps you stay current on insurance policies, technologies, and state and federal insurance regulations.

Job Outlook and Salary

The Bureau of Labor Statistics (BLS) is a federal agency that collects and reports economic and labor-related data. The agency is known for its Occupational Outlook Handbook, which provides information about different occupational groups, including salaries, required education, training, and job outlook.

Although the agency doesn’t have a generic category for underwriters, it does offer information about insurance underwriters. According to the BLS, the median annual salary for professionals in this field was $77,860 in 2023. Many individuals entered the field with an undergraduate degree and had a moderate level of on-the-job training. There were 125,500 jobs in the field in 2022. But, the agency predicts a drop of 2% in jobs between 2022 and 2032 for a total loss of 3,000 positions.

How Do I Begin an Underwriting Career?

The easiest way to start a career in underwriting is to get an education. A bachelor’s degree with coursework in math, accounting, economics, and any other related field helps. Make sure you have the right skills, including analytical and communication skills, and get certified. Once you have all that under your belt, look for entry-level jobs that can provide you with the training you need to advance in your career.

Do Underwriters Make Good Money?

The average salary for an insurance underwriter was $77,860 as of 2023. Professionals in the top 10% of their fields earned more than $132,010.

Is Underwriting a Dying Career?

Most people believe that automation and intuitive software is crushing the underwriting industry. But the opposite is true. Underwriting is not a dying career. Underwriters are still necessary because they provide important analytical and decision-making services for financial services companies.

The Bottom Line

Underwriting is a very important part of the financial industry. Professionals who work in this discipline evaluate risk and the creditworthiness of individuals and businesses just to name a few responsibilities. As an underwriter, you’ll find work in retail and commercial banking, insurance, and securities. If you get the right education and experience and follow the steps laid out in this article, you may find yourself rising up the ladder and end up among the top 10% with a pretty decent salary.

Read the original article on Investopedia.