What is Insurance Underwriting?
Risk is an integral part of doing business, the higher the risk the better the returns. This is the general rule but exceptions are always there. Risk can’t be avoided altogether; it can be reduced and hedged with certain strategies that allow businesses to function smoothly. Insurance underwriting services provided by Insurance companies helps other businesses to hedge their risk and lower their overall exposure. Businesses are required to pay a premium to insurance companies as a fee to hedge their risk.
The underwriting process help insurance companies to price the risk based on multiple variables related to the business. It is calculated based on two major factors that include, coverage provided to a potential policyholder, the probability of claim made on the insurance. An insurance underwriter is responsible for evaluating how much coverage should be given to a policyholder in case of an unfavorable event. They review the application for insurance coverage and reject or accept the application based on their risk evaluation.
Responsibilities of an Insurance Underwriter
An insurance underwriter has a huge role to play in insurance companies and there’s a lot on their plate. Broadly speaking, the role of an insurance underwriter is to identify which parties are suitable for coverage and what kind of coverage can be provided based on their risk evaluation. An insurance underwriter is responsible to dig deeper into the possible risks associated with a business or industry and review the detailed information to measure the actual risk.
They are responsible for identifying the best policy coverage that could be provided to the prospective clients, the damages that are insured and the terms and conditions of the insurance policies. They also perform the task of finding solutions that will reduce and minimize the risk arising out of future insurance claims. They also work together with the broker to help find out the best insurance coverage for the clients in case the scenario is unclear.
Underwriters are highly trained professionals who know the ins and outs of the insurance sector and the policies offered by insurance companies. They specialize in the process of risk assessment and use their extensive research and knowledge to identify if they should be covering a particular risk or not in their insurance policies. The role of an insurance underwriter is very different from a broker and should not be confused with it.
Becoming an Insurance Underwriter
Underwriting is a very rewarding career opportunity in the insurance and finance industry. Insurance underwriters are generally employed by insurance organizations or independent insurance brokerage houses. How to become an insurance underwriter can be a puzzling question. There’s no one specific course of action and it is very subjective. The very first step in becoming an insurance underwriter is to finish your graduation in a relevant field.
You can choose among business, finance, accounting, economics, commerce, etc. However, some big organizations also demand an MBA degree for insurance underwriters. So, the academic requirements differ from organization to organization but an MBA degree in a relevant field will surely boost your prospects and give you’re an edge over the competition. Insurance underwriting professionals are also required to have decent computer knowledge since all the activities are carried out on the system in the contemporary scenario.
Underwriting course is strongly recommended for individuals who want to obtain a holistic understanding of how the industry works and want to gain practical exposure to the work. You also need to work on your commination and interpersonal skills in addition to learning all about the insurance, finance and business sector. You are also required to have strong analytical skills to excel in this job. Honing your soft and technical skills will help you land up your dream job easily.
Also Read: Role of an Underwriter