What does a underwriter do?

What is a Underwriter?

An underwriter is a financial professional who is able to take a look at an individual's financial situation and determine how much risk a lender would be willing to take on if they give a loan to that individual.

Underwriters also determine whether someone can be approved for insurance and under what terms. They evaluate insurance applications and determine coverage amounts and premiums by using math based on actuarial science.

What does a Underwriter do?

Most underwriters specialize in one of four broad fields: property and casualty, life, health, and mortgage. Although job duties are similar, the criteria used by underwriters vary.

For example, for someone seeking life insurance, underwriters consider age and financial history. For someone applying for car insurance (a form of property and casualty insurance), underwriters consider the person's driving record.

Within the broad field of property and casualty, underwriters may specialize even further into commercial (business insurance) or personal insurance. They may also specialize by the type of policy, such as insuring automobiles, boats (marine insurance), or homes (homeowners’ insurance).

For mortgages, underwriters look at the size of the loan an individual requests and will assess how well they anticipate that they will be able to pay back that loan. They do this by evaluating a person's income, debt, credit history, and assets.

Underwriters typically do the following (depending on specialty):

• Analyze information in insurance applications
• Determine the risk of insuring a client
• Screen applicants on the basis of set criteria
• Evaluate recommendations from underwriting software
• Decide whether to offer insurance
• Determine appropriate premiums and amounts of coverage
• Write policies to cover potential loss
• Investigate credit history
• Order an appraisal
• Verify income and employment
• Look at debt-to-income ratio
• Verify down payment and savings

Underwriters are the main link between an insurance company and an insurance agent, or a mortgage lender. Underwriters use computer software programs to determine whether to approve an applicant. They take specific information about a client and enter it into a program, which then provides recommendations on coverage, premiums, or loan amounts.

Underwriters evaluate these recommendations and, using predetermined criteria, decide whether to approve or reject the application. If a decision is difficult, they may consult additional sources such as medical documents and credit scores.

Underwriters must achieve a balance between risky and cautious decisions. If underwriters allow too much risk, the insurance company will pay out too many claims. But if they don't approve enough applications, the company will not make enough money from premiums.

What is the workplace of a Underwriter like?

Underwriters usually work indoors in a comfortable office setting. Some property and casualty underwriters may visit properties to assess them in person. Most underwriters work full time.