Underwriter

 

What does this person do?

Underwriters accept or reject risks on behalf of the insurance company. Brokers and agents submit applications for insurance on behalf of individuals or businesses and an underwriter identifies and calculates the risk of loss under insurance policies and enables an insurance company to charge an appropriate premium to cover those risks. They review the applications and decides whether to offer insurance to the applicants (that is, whether to accept or reject the risk). Underwriters also:

  • Determine what coverage is available, the premium to be paid and other terms required in accepting the risk
  • Counsel clients on risk management solutions, negotiates terms and contracts, and develops relationships with key clients (i.e. Brokers)
  • Review existing client portfolios and determine whether the insurance company should continue to provide insurance coverage for the risk
  • Remain aware of current industry trends through development of a good working relationship with brokers and other sources of industry news and developments

The majority of insurance underwriters work close to a standard 40 hour week, normally from fixed office locations.

However, some insurance underwriting jobs do require varying degrees of travel, such as those related to the insuring of workplaces, construction sites, ships, etc. In these cases, the insurance underwriter usually most inspect the venue to assess the risk. Depending on the type of insurance being requested, insurance underwriters may conduct independent investigations of applicants, such as credit or background checks.

Also, if property insurance is sought, insurance underwriters may need to enlist help from professional appraisers. Actuaries assess risk at a macro level, determining the proper premiums and policy terms for broad categories of individuals and properties. Insurance underwriters work at a micro level, analysing specific applications for insurance, and setting the specific policy terms and conditions for each that they accept, within guidelines set by the insurance carriers.

 

Personality Traits

Underwriters should have the following:

  • Numeracy and analytical skills
  • Communication skills, problem-solving and analysis skills
  • The skills needed to understand and apply technical information
  • Sound strong analytical and judgment skills and pay attention to detail
  • Knowledge of the insurance industry
  • The skills needed to apply commercial and financial principles
  • Strong interpersonal skills
  • Sell-confidence
  • Willingness to use their own initiative
  • Good computer skills
  • Strong organisational and time management skills

 

Learning Path

Insurance companies and underwriting firms usually look for trainee underwriters who have actual experience or knowledge of the insurance industry. Employers prefer to hire university graduates, even for entry level underwriting positions. A Senior Certificate with matriculation exemption and mathematics is therefore required. However, insurance companies may appoint Matriculants as “underwriters” in a call centre environment where they log clients information, and an electronic processing system computes a quotation or premium.

A Bachelor’s Degree is expected. Coursework in business, finance or accounting can be helpful, but not required. A high degree of computer literacy is increasingly important, since the data analysis involved in the job is commonly computerized. Entry-level jobs usually require no special training or certification. However, obtaining some formal certification often is important to advance in the field.

Industry experience:

Before entering the career, candidates should ideally hove some experience in one or more of the following work areas:

  • Insurance work such as claims assessment and customer or intermediary services
  • Work in medical and related fields
  • Survey or inspection work
  • Legal services work
  • Banking, accounting or investments work
  • Work in a call centre environment
  • Research and analysis work

 

Employment Avenues

Underwriters may either be self-employed or work as employees of insurance companies or in specialised underwriting firms. Increased computerisation and mergers within the insurance industry may have reduced the demand for generalists. Insurance companies cover more specialised risks and tailor products for niche markets, the demand for specialist underwriting services will increase.

 

Professional Regulation

You need to obtain a qualification that is recognised by the Financial Services Board (FSB) as either being generally or specifically relevant to category of Financial Service Practitioner (FSP) you wish to be registered in.

You need to successfully complete the Level 1 Regulatory Examinations (RE 1) of the Financial Services Board (FSB) as well as the relevant modules at Level 2 (RE 2). Passing these examinations results in being considered ‘FAIS Fit and Proper’, or compliant with the requirements of the Financial Advisory and Intermediary Services (FAIS) Act.

Also the Insurance Institute of South Africa (IISA) offers Programs in Insurance, or provides recognition of other insurance related qualifications or courses. These are needed in order to register as an IISA Member.

Please check the entry requirements at the institution of your choice.