November 26, 2022

What does an insurance underwriter do?

Insurance underwriters are professionals who evaluate and analyze the risks involved in insuring people and assets. Insurance underwriters establish pricing for accepted insurable risks. The term underwriting means receiving remuneration for the willingness to pay a potential risk. Underwriters use specialized software and actuarial data to determine the likelihood and magnitude of a risk.

What is Underwriting?

Insurance Underwriter
Insurance Underwriter

Do insurance underwriters make good money?

  1. Insurance underwriters evaluate the risks involved in insuring people and assets and establish pricing for a risk. 
  2. Underwriters in investment banking guarantee a minimum share price for a company planning an IPO (initial public offering).
  3. Commercial banking underwriters assess the risk of lending to individuals or lenders and charge interest to cover the cost of assuming that risk.
  4. Assume the risk of a future event and charge premiums in return for a promise to reimburse the client an amount in the event damage or occurs.

Investment Banking Underwriters

The underwriters of an investment bank often guarantee a specified amount of capital to a corporation during an initial public offering (IPO), an amount which is theoretically provided by investors as the source of capital. The bank acts only as the “facilitator” of the transaction, but they have still taken on an “underwriting risk” by promising to provide those proceeds of the sale to the client, regardless of the success or failure of the sale of its company’s shares.

Ways Machine Learning Can Enhance Insurance Underwriting
Ways Machine Learning Can Enhance Insurance Underwriting

Insurance Underwriters

Insurance underwriters assume the risk involved in a contract with an individual or entity. For example, an underwriter may assume the risk of the cost of a fire in a home in return for a premium or a monthly payment. Evaluating an insurer’s risk before the policy period and at the time of renewal is a vital function of an underwriter.

For example, homeowners insurance underwriters must consider numerous variables when rating a homeowner’s policy. Property and casualty insurance agents act as field underwriters, initially inspecting homes or rental properties for conditions such as deteriorated roofs or foundations that pose a risk to the carrier. The agents report hazards to the home underwriter. The home underwriter additionally considers hazards that may trigger a liability claim.

Hazards include unfenced swimming pools, cracked sidewalks, and the presence of dead or dying trees on the property. These and other hazards represent risks to an insurance company, which may eventually be required to pay liability claims in the event of accidental drownings or slip and fall injuries.

Inputting a number of factors, which often includes an applicant’s credit rating, homeowner insurance underwriters employ an algorithmic rating method to pricing. The system generates an appropriate premium based on the platform’s interpretation and the combination of all data reported from the observations of the field underwriter. The lead underwriter also subjectively considers answers submitted by the applicant on the policy application when arriving at a premium.

Insurance companies must balance their approach to underwriting: if too aggressive, greater-than-expected claims could compromise earnings; if too conservative, they will be outpriced by competitors and lose market share.

Commercial Banking Insurance Underwriters

Commercial banking underwriters assess the creditworthiness of borrowers to decide whether the individual or entity should receive a loan or funding. The borrower is typically charged a fee to cover the lender’s risk if the borrower defaults on the loan.

Medical Stop-Loss Insurance Underwriting

Medical stop-loss underwriters assess risk based on the individual health conditions of self-insured employer groups. Stop-loss insurance protects groups that pay their own health insurance claims for employees rather than paying premiums to transfer all of the risk to an insurance carrier.

Self-insured entities pay medical and prescription drug claims plus administration fees out of company reserves and assume the risk posed by the potential for large or catastrophic losses such as organ transplants or cancer treatments. Underwriters for self-insured entities must thus assess the individual medical profiles of employees. Underwriters also evaluate the risk of the group as a whole and calculate an appropriate premium level and aggregate claims limit, which, if exceeded, may cause irreparable financial harm to the employer.

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Fast Fact of Insurance Underwriter Positions

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The Sr. Specialty Underwriter, Property is responsible for reviewing, analyzing and managing the property book of business. Using independent judgement, prepares quotes, recommendation, responds to coverage questions, while building successful relationships with agents. Driven by an entrepreneurial spirit, Sr. Specialty Underwriter consistently works to increase positive and profitable business flow growth in the specialty lines business unit.

As the Sr. Specialty Underwriter, you will be responsible for the following:

· Build, maintain and utilize strong relationships with wholesale business partners to generate opportunities in line with Specialty guidelines

· Review and analyse underwriting submissions to determine suitability for quoting.

· Generate quotation terms based on underwriting expertise, and in accordance with Letter of Authority.

· Negotiate terms and conditions of facultative reinsurance support with intermediary and direct markets.

· Lead and manage direct reports providing coaching, training and performance management.

· Negotiate terms and conditions of quotations with wholesale business partners.

· Generate binding documents.

· Operate Specialty systems including but not limited to AIM and AIR programs.

· Liaise with Underwriting Associates to ensure correct procedures are adhered to.

· Peer review quotation, binding and policy documents for other underwriters in Property sector of Specialty.

· Provide disciplined approach to exposure evaluation, risk assessment and pricing.

· Using risk insights, data and models to drive informed decisions at point of sale.

· Monitor and enforce underwriting rules and guidelines, insurance laws, regulations and rating manual rules.

· Serve as a customer industry advocate with a focus on improving the customer experience by understanding market risk and offering the best end-to-end solution to meet insurance needs.

· Collaborates and guides Specialty Underwriter(s) and Underwriting Associate(s) on accounts and relationships.

· Attend client meetings, broker calls and conventions as needed.

· Offer additional support to Lead Underwriter and VP, Property as needed

· Performs other related work as assigned.

Education and Experience:

· High School Diploma or Equivalent

· Bachelor’s Degree preferred;

· CPCU, ARM, Agent or Broker licence preferred

· Five (5) or more years of experience in commercial underwriting or brokerage, market facing area, claims or underwriting support areas.

· Supervisory experience highly desired

Other Credentials and Job Requirements:

· Demonstrated experience in the Commercial Underwriting, Claims or Underwriting Support area.

· Knowledge of RMS & AIR preferred

· Demonstrated experience in using analytical, problem-solving and decision-making skills.

· Superior skills in relationship building, active listening, needs analysis, and win-win negotiating.

· Possess working knowledge of time restraints for quotes on new and renewal business.

· Strong knowledge of underwriting philosophy, techniques, national/local filing regulations and guidelines.

· Works independently with little supervision, and strong team player

· Proven record of accomplishment reflective of consistent position growth and demonstrated technical knowledge and strong understanding of Insurance Operations.

· Ability to consistently apply underwriting concepts and practices within the Specialty underwriting field.

· Ability to strategically manage risk and analyze data.

· Experience working in a challenge, fast paced and team environment.

· Ability to convey clear & concise information to others utilizing excellent verbal and written communication skills.

· Advanced knowledge of Microsoft products including a strong foundation in Excel (pivot tables, v-lookups, etc.).

· Strong attention to numeric and other details.

· Solid customer service orientation.

· Strong organizational and prioritization skills and ability to manage large work volume and meet tight deadlines.

· Ability to travel as needed.

About GuideOne:

GuideOne Insurance was founded upon two key philosophies that endure to this day: a commitment to social responsibility, and a dedication to serving customers in select niche markets.

At GuideOne Insurance, we believe that our people are our greatest asset. We encourage our employees to work towards common goals and succeed together. GuideOne is a recognized expert in providing Commercial Lines insurance and financial services to:

· Religious Organizations

· Non profit organizations

· Educational Institutes

· Program Business

· Construction

· Infrastructure & Rail

· Energy & Mining

· Financial / D&O

· Technical Property

Rich Benefits Package:

· 401K includes a match up to 6% at 100%.

· Generous time off program including; personal, holiday, and volunteer paid time off.

· Flexible work schedules.

· Wellness incentives.

· Free Basic Life and AD&D.

· Free short-term and long-term disability.

· Educational assistance program.

· 3 different medical plans options to meet individual needs, including dental and vision.

· Company sponsored community volunteer opportunities.

This Company Participates in E-Verify

https://www.guideone.com/AboutUs/PDFs/everify.pdf

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