How to hire for an Insurance Underwriter

Summary:

Underwriters are financial specialists who work in the banking and insurance industries, and stock markets. They evaluate, research and undertake a client’s risk for a fee such as a commission, premium or interest.

Underwriters for insurance contracts review any applications for coverage plans, and then reject or accept the applicant based on a standard
system of risk analysis. Insurance brokers and other relevant insurance entities will submit the applications for insurance coverage for their clients, and then the underwriters review and choose whether to offer coverage.

Standard Job Description:

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, homeowner’s 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 several 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.

Underwriters role differ when they are evaluating risk of insuring a home, car, driver or individual in the case of life insurance or health insurance, to determine if it’s profitable for the insurance company to take the chance on providing insurance. After determining “risk”, the underwriter sets a price and establishes the insurance premium that will be charged in exchange for taking on that risk.

Key Job Responsibilities:

1. Collect appropriate and accurate information required to assess potential clients and decide on the acceptable risk for a policy.

2. Review policy applications based on the previous loss records, age, medical report, credit ratings and driving records.

3. Prepare reports that detail risk assessment findings that contribute to the final decision.

4. Compare various policies having similar risk undertaking and conduct actuarial studies to decide on the company’s loss records.

5. Evaluate policies with regards to the company’s underwriting standards.

6. Decide to accept, modify or reject an insurance application after scrutiny of all the required documents and studies regarding the risk involved.

7. Analyze statistical data using specialized computer programs.

8. Write quotes, determine premiums and coverage, and negotiate terms with brokers and clients.

9. Carefully select the wording of policies and prepare the terms and conditions.

10. Handle queries from credit control departments, brokers and clients.

Ideal Candidate:

1. Analytical thinker with research proficiencies.

2. Ability to use reasonable and sound judgment.

3. Strong problem-solving and decision-making skills.

4. Thorough knowledge of databases and tracking systems.

5. Solid organizational skills and detail oriented.

6. Ability to work under pressure and meet strict deadlines.

7. Strong interpersonal and negotiation skills.

8. Brilliant IT, math and statistical skills.

9. Deep knowledge of underwriting regulations.

10. Ability to build positive relationships and partnerships with clients, brokers and key role-players.

Desired Education:

Any Graduate or Post-graduate Degree in Finance or Business Administration

Certifications Associated:

1. International certification in “Life & General Insurance” by Insurance Institute of India.

2. Chartered Property and Casualty Underwriter (CPCU) by Insurance Institute of America (IIA) and the American Institute for Chartered Property Casualty Underwriters (AICPCU).

3. Actuarial Science Certifications.

Key Skills:

Underwriting, Medical underwriting, Financial underwriting, Personal accident, Health insurance, Actuarial Science, Group Insurance, Life Insurance, Risk Management, Statistical analysis, Policy Issuance, Policy Servicing.

Common Positions:

1. Underwriter

2. Origination Underwriter

3. Actuarial Analyst/Associate/Manager

4. Claims
Adjuster/Analyst/Examiner/Manager/Representative/Specialist/Clerk

5. Insurance Underwriter

Screening Questions/Assessment Parameters:

1. In which areas of insurance you have done underwriting? What was your role there?

2. As an underwriter, you need to stay as current as possible on existing laws you might encounter. Can you tell me about your process here?

3. What sorts of insurance products you have evaluated? What was the price at risk for the company? Also, explain the methodology behind its
calculation?

4. Which software (or other sources) for backing your evaluations. Describe in detail?

Basic Terminologies:

1. All Perils. An optional coverage designed to provide protection for your vehicle for all types of losses except those specifically excluded in your policy.

2. Coinsurance. In property insurance, a clause under which the insured shares in losses to the extent that he or she is under insured at the time of loss.

3. Embezzlement. The fraudulent use of money or property that has been entrusted to one’s care.

4. Grace Period. A period after the premium due date, during which an overdue premium may be paid without penalty. The policy remains in
force throughout this period.

5. Joint Tenancy. Ownership of property shared equally by two or more parties under which the survivor assumes complete ownership. This
is different from a tenancy in common, where the heirs of a deceased party to the tenancy inherit his or her share.

6. Lessee. The person to whom a lease is granted, commonly called the tenant.

7. Lessor. The person granting a lease, also known as the landlord.

8. Libel. A written statement about someone that is personally injurious to that individual.

9. Mortgagee. The creditor to whom a mortgage is given, and who lends money on the security of the value of the property mortgaged.

10. Named Perils. Named perils are the specific dangers a policy insures you against – such as fire, windstorm, and hail in a homeowner’s
policy. These perils are “named” or listed in the policy.

Industry Jargons:

1. Underwriting: This is a process by which a life insurance company assesses and classifies the risks.

2. Benefit Illustration: It is a customized document for the potential policyholder and mentions the expected benefits along with cost and
charges associated with the plan.

3. Projected Investment Rate of Returns: The projected invested rate of returns are investment returns that the participating fund is expected to earn after accounting for expenses.

4. Freelook Provision. In simpler terms, it is an option to get the refund if you don’t like the contract terms.

5. Policy Loan: Typically, a life insurance policy with cash value come with an option to avail loan against the contract. This loan so taken is called policy loan.

6. Maturity Date: This is agreed date when the life insurance contract matures, and the insurance company pays the lump sum benefit.

7. Life Expectancy: This, in simple terms, is an average lifespan of the individual.

8. Paid-up Option: It is an option that the insuran company offers to the policyholders when they are not able to pay premiums. This option lets the policyholder lower their sums assured and in return, they are relieved from the obligation to pay future premiums

9. Total and Permanent Disability: While the definition of Total and Permanent Disability (TPD) varies with the insurer, it refers to the condition when life insured is unable to earn living and the condition persists for at least 6 months. In such case, a payout is made if the life insured had
opted for the TPD rider.

10. Living Benefit: Unlike Death Benefit, which is paid when the life insured dies, the living benefits are paid when the life insured suffers from Terminal Illness or TPD. These are also known as accelerated death benefits as the benefits are accelerated and paid before death.

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