Underwriting
- Description
- Tasks
- Skills
- Useful Knowledge
- Entry Qualifications
- Professional Qualifications
- Trends
- Resources
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The British insurance market is comprised of two sectors, the company market, and Lloyd’s of London. Lloyd’s specialises in complex risks that are large or otherwise difficult to quantify and understand, and therefore difficult to place in other markets. The Lloyd’s market covers some of the world’s largest, most individual and complicated risks, from oil rigs and bridges, to celebrity body parts and sporting events. Insurance involves charging a fee (called a ‘premium’) in return for providing customers with cover against potential loss or damage. Insurance can be underwritten for personal things like a customer’s home, their pet, car, overseas travel or their life. In the case of commercial insurance, you could be determining the insurance conditions for complex risks, such as a multimillion-pound business, an oil rig or aircraft. Some insurers even underwrite cover for damage to reputation or specific professions, such as football, where an injury might end a professional career. As an underwriter, it will be your job to determine whether applications for insurance should be accepted, and, if so, at what price and if any special terms should be applied. Usually specialising in a product area, you’ll work closely with actuaries, risk and claims managers, to ensure that your company’s insurance premiums are competitive enough to attract and keep customers, but cover the potential losses from settling claims.
Salary
A trainee underwriter, joining on graduate programme can expect to earn an approximate annual salary of £25,000. When fully qualified, and with the right experience and skills you could progress to earn in excess of £100,000 per annum. If joining in a support role with the intention of taking professional qualifications to qualify as an underwriter you can expect to earn £14,000 per annum approximately. This does not include potential bonuses and additional benefits. Salaries may vary based on location and employer.
- Gathering sufficient information and resolving any discrepancies to enable you to assess the risk accurately
- Informing the customer of any risk improvements required, as appropriate
- Applying current underwriting criteria to reflect the features of the risk, including appropriate limitations or extensions of cover
- Identifying and clarifying any differences between policy cover and the customer’s requirements
- Informing the customer promptly of your decision
- Agreeing final terms and premium
- Maintaining accurate and complete records at all times
- Exceptional analytical skills to evaluate each situation effectively
- Strong, clear communicator, both verbally and in writing
- Professional manner
- Negotiating and influencing skills
- Excellent mathematical and statistical ability
- Good people, interpersonal and listening skills
- Strong teamwork and customer service ethic
- Articulate, confident networker, good at building and maintaining business relationships
- Respectful about what information you can disclose to others
- Influencing skills
- Accountable and confident in making decisions
A new entrant will not always be required to have this knowledge. Employers usually provide training to acquire skills for:
- Risk management techniques
- How to set appropriate prices and terms for an insurance contract
- Legal and regulatory restrictions on underwriting
Some people may switch from actuarial, claims management or risk management roles. Although often there is no subject requirement, a business, numerical or economics orientated degree may be more useful. On occasions, opportunities for assistant underwriting positions may arise where the person would join an underwriting team as a junior underwriter or insurance technician. If entering the profession in a support role with the intention of undertaking professional training to become an underwriter, employers will expect at least:
- A Levels, Scottish Highers or equivalent qualifications such as Business, Administration and Finance (BAF) Diploma, BTEC National Diploma, Welsh Baccalaureate (BAC), SVQ Level 3 (SCQF Level 7)
Many insurers operate graduate training schemes in underwriting. Most employers will expect a 2:1 degree for entry onto these schemes.
The Edexcel BTEC Level 3 Award in Lloyd’s and London Market Insurance (LLMIT) and the CII Level 3 Award in London Market Insurance are established qualifications for wholesale brokers working in the London Market. It covers the roles and working practices of brokers, Lloyd’s underwriters and insurance companies. On completion of LLMIT, it is possible to work towards the Chartered Insurance Institute (CII) Certificate in Contract Wording which enhances knowledge of the practical application of wordings and the issues associated with them.
Once in employment, underwriters usually follow industry-specific professional qualifications, choosing units of study relevant to underwriting and the specific insurance function – for instance marine, commercial or general insurance. Professional qualifications undertaken depend on employers and personal abilities, but quite often start at the Certificate level, progressing upwards:
- CII Level 3 Certificate in Insurance
- CII Diploma in Insurance
- CII Advanced Diploma in Insurance, which leads to Associate membership of the CII (ACII).
With the CII Advanced Diploma and three years' documented Continuing Professional Development, underwriters can apply for CII Fellowship and Chartered Status. In addition, CII also offers a Certificate in Contract Wording, which is very relevant to underwriters who determine the precise terms and conditions of insurance that appear in policy documents. It may be possible to progress towards an MSc in Insurance and Risk Management, delivered by the CII and Cass Business School, which explores the growing relationship between insurance, risk management and financial services.
One you are in work you can take a qualification that proves your competence at your role, for example the Level 2 and Level 3 Certificate in Providing Financial Services available from Edexcel, EDI and City & Guilds.
You might work for an insurer, a reinsurance company, a broker in the London markets or a managing agent at Lloyd’s. Banks and credit agencies also employ underwriters in-house. As the UK’s major insurance centre, the majority of underwriters work in central London and surrounding boroughs, particularly commercial underwriters. However, regional opportunities do exist, mainly in cities and large towns.
