Job Responsibilities
Even though insurance is often lumped in with finance, the roles
they play in the business world are definitely distinct. I liken
the job of an underwriter to that of an analyst at a typical
financial firm. Most of an underwriter's time is spent
researching a company and evaluating the "risk" based on
predetermined underwriting guidelines. Each insurance company's
guidelines are different, meaning some are willing to take on
certain types of risks and certain amounts of risk (usually these
decisions are proactively made by a team of actuaries). My
company has several lines of business, but they now define
themselves as strictly a P&C (property and casualty) insurer.
Broken down further they write (or "underwrite") standard lines
and specialty lines. I work in a specialty lines (insurance for
accountants, architects, lawyers, medical professionals, financial
professionals, etc.) unit called Open Brokerage. This means we
work directly with insurance brokers (Marsh, Aon, Willis, etc.)
rather than independent agents. A simple explanation of this
relationship is: a large company (usually large companies since
brokers charge a lot for their services) works with a broker to
figure out the types of insurance it needs; the broker solicits
quotes from a number of insurance companies who write those lines;
the broker presents the various options to their client (usually
with a recommendation); the client chooses which insurer to bind
coverage with; coverage is bound (I.e. a contract (called a
binder) is put in writing); a policy is issued; and afterward if
claims come in, they are handled by another group of people (the
claims side of the house).
So, that finally brings me to my job. I work in the Financial
Institutions group, which writes professional liability products
(directors & officers (??D&O??), errors & omissions (??E&O??),
fiduciary liability, employment practices liability) and fidelity
bonds (employee dishonesty insurance) for banks/depository
institutions, insurance companies/brokers, capital markets
(investment advisers, mutual funds, hedge funds, etc.), and life
agents (including stock brokers). A majority (80% perhaps) of an
underwriter's time is spent catering to brokers. This involves
evaluating new opportunities and reviewing renewal opportunities,
by looking over their application, evaluating the type of business
they do and the controls they have in place to mitigate risk (this
can range from computer systems to the strength & makeup of the
Board of Directors to the third-parties they use in the regular
course of their business), reading news on the company, analyzing
their financial statements, and checking for disclosure in their
public filings and internal contracts. Catering to brokers also
includes corresponding with them to either proceed with putting
together a quote or declining the opportunity. Then you work with
the broker to put together a quote that includes the coverage and
terms the insurer is willing to offer (remember those underwriting
guidelines!) and those the applicant needs. Pricing of the
coverage is always a concern; the applicant wants to pay as little
for the most coverage, but the insurer has to be adequately
compensated for the risk they are taking on. Therefore,
negotiating skills often come in handy. After that you have to
work on the binders and issuing policies. I included this under
catering to brokers, because they are constantly hounding you to
do this and do that. In all honesty, there is not enough time in
the day or week to get to the tremendous amounts of requests, so
you have to learn to prioritize. So, in the ??catering to brokers??
category, the 80% of your work is broken down to 50% underwriting
(the evaluating, etc.) and 50% keeping the brokers happy by
working on their requests (these can range from offering an
opinion on a certain coverage to fixing a typo on a policy).
Putting together endorsements is probably the most time-consuming
duty/request, since it involves working with our over-worked legal
staff. Everything we do (opinions, rationale, conversations,
etc.) has to be documented, and this is weaved into EVERY part of
your duties.
10-15% of the rest of an underwriter??s duties are doing projects
for the insurance company itself. This can range from filling out
spreadsheets to help the company evaluate their business to taking
a mandatory online course (many companies offer a lot of online
training, but nobody has time to take these value-adding optional
course, unfortunately) to pulling files for audits to writing
reports for management.
The last 5-10% is spent attending underwriting meetings (a
dialogue between applicants, brokers and underwriters) at the
brokers?? offices or those of the clients??. Some travel is
required, but most often the meetings are held in NYC, where the
Financial Institutions group is (on Wall Street), so they usually
only take a few hours out of the day. If you are lucky, you get
to go on marketing trips to present the highlights of your
company, their products and their services to brokers. These can
be fun, because most brokers tend to be sociable people who want
to build a relationship with a new ??market?? (I.e. a company they
can go to to potentially write policies for their clients).
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Job Requirements
You do not need to have an advanced degree to be an underwriter.
Most are BBAs, BAs or BSs from top undergrad schools. (Keep in
mind, an advanced degree can justify a higher starting salary
and/or initial job title; we have at least on J.D., MBA and MA in
my 20-person group). Since the job requires some degree of
business savvy (reading financial statements, negotiating,
understanding the inner-workings of companies), applicants tend to
be business, finance, accounting or economics majors. However, if
you can demonstrate to the interviewers you are a quick learner
and have the aptitude to learn this type of work, you can get in
that way.
From what I have heard, the best way to apply is through the
website. Once you submit an application/resume, you will have
multiple interviews, and you will have a background check, prior
to receiving an offer.
As for career path, here is how my department works:
1. Underwriter Trainee (a recent grad with no experience; some
cmpanies have training programs for these employees)
2. Underwriter (has some insurance experience)
3. Underwriting Specialist (has some underwriting experience)
4. Underwriting Consultant (either someone with an advanced degree
they can equate to insurance experience or just someone with even
more experience than a Specialist)
5. Underwriting Consulting Director (??even more experience??)
6. Underwriting Director (this person usually heads up a team??like
the Insurance Company team in my group??and he/she has Trainees
through Consulting Directors working under them)
7. Assistant Vice President and Vice President (sometimes groups
do not have AVPs, just VPs, but in this role, you are the head of
the whole department??like the Financial Institutions group??and
he/she has the Directors and AVPs reporting to him/her)
8. Senior Vice President (heads up a business unit??like Open
Brokerage in my group)
9. President of Specialty Lines
10. President of P&C Ops
11. CEO
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Uppers
Feeling like a big shot, meeting with the CFOs and risk management of large
companies.
If you are young, believe it or not, the departments that work with brokers (who
tend to be young, too), it is a good place for camaraderie and a good place to
learn business skills.
You are encouraged to obtain an advanced degree, which they will pay a portion
of. In my group we have at least one person going to law school and a couple of
others ready to get their MBAs.
Travel opportunities (though few and far between, it can be looked at as a
perk).
Corporate card (doing business & building those broker relationships over lunch
or after-work cocktails is not that uncommon).
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Downers
Although CNA performs well financially now, we are always reminded
that at one point we weren??t. Since my department works with
large financial institutions, it is part of their job to evaluate
their potential insurer.
Annoying brokers who always want you to give to them but rarely
give back.
The benefits (you would think insurance companies would have great
benefits, such as cheap and comprehensive insurance!).
HR as a whole (I have worked at two large insurers, and both have
been horrible!).
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Lifestyle
Underwriting is a 9-to-5 job. Some companies require you to work much longer
hours, but really this just means they are understaffed, or they have overbearing
management. Since you work with brokers whose jobs are also 9-to-5 (though
they??d like you to believe otherwise), when they are not at work, you really do
not need to be, unless you have responsibilities to finish that do not involve
catering to the broker. I have stayed really late and worked on the weekends,
but that was because I just like to get ahead, not because it was required.
Business travel is minimal, and it is usually either assigned to the senior or
best underwriters. If you are comfortable meeting with powerful people and make
it known you want to travel, you may get the opportunity. Otherwise, you have to
work your way up to get to travel. Almost every underwriter, if they have paid
their dues, will attend local underwriting meetings.
Dress code can range to suits (or the equivalent female business attire) every
day to casual Fridays in the summer to business casual. Suits are always
required if you are meeting with someone outside of your company.
Some companies have social events and some do not; it varies widely among
companies. Most underwriters have the opportunity to attend annual parties for
brokers, agents and law firms, especially during the holidays. The insurance
companies themselves sometimes have parties for their clients. Some have annual
parties for their employees. Some companies have team-building trips.
Frequently (one, two or more times per year) there are industry conferences which
sometimes double as social events. Beware, as a 1st-year underwriter, some
companies do not allow you to do any of this (mine lets you do it all!).
Diversity is pretty low in the insurance world. There is a stigma of it being a
middle-aged white male business. This is true, though now the majority of
underwriters are very young (in my department, everyone under the Director
position is in their early to mid 20s).
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Compensation
Base salary also varies widely by company. An underwriter trainee
can make anywhere from $25,000 to $45,000 per year. An
underwriter can make $25,000 to $70,000. Raises are usually
industry standard based on what the overall economy/market says,
so from year to year it can be 2% to 6%. Almost every company
does an annual employee review. Raises and promotions are common
every year or two, especially those at companies that have a lot
of layers of titles. Turnover is high in good economic years,
because an underwriter can make more money moving to another
company. At my company in my department turnover is very low,
because we like working with one another. The general rule of
thought is that high-level managers make a lot of money, because
they were rewarded for their loyalty for sticking around in the
prosperous late 90s, but most people boost their salary by moving
from company to company. Directors make anywhere from $50,000 to
$140,000.
Some companies do not pay bonuses. The companies that do usually
peg them to the performance of the company and the
department/unit. The bonus does not usually have anything to do
with the employee??s performance, except that he/she usually has to
achieve at least a certain ??grade?? in their annual evaluations.
Bonuses are generally paid once a year and based on the previous
calendar year (my company pays them in March or April). They can
range from 0%-5% to 50%. The higher up you are, the better your
bonus, in order to reward talent they want to keep. It is not
uncommon for lots of people to quit a company after poor bonus
payments, since usually only top-level management have guaranteed
bonuses.
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Advice to Jobseekers
Insurance is a necessary component of every business. Therefore,
insurance companies providing P&C insurance are necessary, and it
is necessary to have underwriters evaluating the risks. There are
just too many variables and hidden or hard-to-uncover facets of
large companies for a computer to evaluate an application and spit
out a premium figure (though we all like to joke around about it).
More and more companies are using automated systems to generate
quotes and policies, but my line will require smart human beings
to do the work for many many years to come.
Insurance underwriting is a great way to develop business skills,
like negotiating and financial evaluation. It is also a good
9-to-5 job to have while getting an advanced degree part-time.
I recommend the job to anyone who is unsure of what part of the
financial world they want to get into. You will get to explore
all sorts of companies, so maybe this will help you discover your
true calling (if it turns out not to be insurance). You just have
to posses a few skills/characteristics in order to be successful:
Confidence, Patience and the Drive to make a few bucks for the
company as a whole.
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