The role of the underwriter is a key position in any organization that deals in financial services. Whether it is one underwriter or a team of underwriters, they are responsible for making the final decision over whether a customer is approved or declined for an insurance policy or loan product.
When applying for car insurance, life insurance, or a bank loan, it starts with a standard application process either on paper or online. This is processed and reviewed initially by case handlers or customer service agents and then packaged for the underwriting team to make a final decision.
The underwriters will review all the information about the individual or business and, taking in all the data, they will analyze whether that case should be approved and determine what terms and rates should be charged.
For instance, when someone is applying for a personal loan, the underwriter will receive the application at the final stage and consider facts such as credit ratings, affordability, employment status, and previous payment history to confirm how much the person can borrow, for how long, and what rate can be charged. Once confirmed and the terms are approved, the loan can be funded. (Source: MYJAR.)
What Is the Responsibility of an Underwriter?
Underwriters have a key position in their organizations. Essentially, they make the final call on who gets approved. It is all about analyzing risk and understanding whether the customer will be a liability, causing the firm to lose money by not repaying their loan or making a huge claim on their insurance policy.
The underwriter has to understand the business’s level of risk and its appetite to service insurance policies and loans. This is a huge responsibility, because making the wrong judgment call can leave the company out of pocket or suffering losses.
What Education Do You Need to Become an Underwriter?
There are specific underwriting courses and degrees available that incorporate accounting, mathematics, and risk analysis. For the very minimum in the UK, underwriters are expected to have strong results in their GCSE or A-Level mathematics exams.
Organizations such as banks and insurance brokers will typically take on junior underwriters at a young age and give them experience so that they can progress, so a lot of underwriting can be learned within an organization and taught on the job.
The American Institute for Chartered Property Casualty Underwriters offers a training program for beginning underwriters. It also offers two special certifications: Associate in Personal Insurance and Associate in Commercial Underwriting. This course takes two years to complete, and then you become a qualified underwriter.
Where Could an Underwriter Work?
Underwriters are typically found in companies that offer or broker financial products, including:
• Insurance (car, personal, business)
• Personal loans
• Credit cards
• Credit unions
• Guarantor loans
What Should Recruiters Be Looking For?
Recruiters looking to hire underwriters for their clients can of course look at existing underwriters who may be interested in a new role. Otherwise, they should seek individuals who have backgrounds in financial services and are looking for new challenges. This includes lawyers, accountants, bank managers, and customer service staff who have worked in financial institutions.
Ideally, recruiters should find people with a good business background who are good at critical thinking, risk analysis, mathematics, and statistics.
Daniel Tannenbaum is a marketing consultant at Tudor Lodge Consultants.
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