What does an Underwriter actually do?

Mrs. Shibb has a short phone interview scheduled in a couple of days for an entry level position as an Underwriter Trainee. In preparation we’d like to try and find out as much as possible about what an underwriter does in his/her daily job to see if this would be a good fit. Mrs. Shibb has a CompSci background and could have gotten a second degree in Math if she’d taken one more semester of school. She’s not the most outgoing person but is reasonably intelligent, even by Doper standards, and gets along well with people. She is always well commended in previous jobs (none of which bears any resemblance whatsoever to underwriting).

So, come out of the woodwork, you closet underwriters, and tell us what you do at work all day.


Errr…what kind of underwriter? Insurance–What line, auto, fire, life, health commercial, etc? Loans?

Generic anwer for financial services is: an underwriter reviews information on applications and makes determinations as to the acceptability of the new business.

You see how much I know about Underwriting, I didn’t even know that there were different kinds. I’m guessing car insurance, since the companies website says they are the biggest car insurance underwriter in California. I don’t know if they do other types of insurance as well.

In insurance:

An underwriter lends their skills to underwriting a policy, basically determining whether or not to offer a customer a policy based on their risk characteristics. They are basically saying “yes” or “no”, as opposed to rating the policy, which is determining how much to charge for the premium. In car insurance (in the voluntary market) the underwriting department would be responsible for setting guidelines as to what risks the company will accept (no more than 2 at-fault accidents in the last 3 years for example) based on the flexibility of the insurance product they offered.

An underwriter might interact with sales and service, reviewing applications flagged because of certain risk patterns and deciding whether or not to offer/renew a policy. They may work with Product to determine the underwriting guidelines necessary for that product to return a profit. They may also work with the actuarial department to identify favorable and un-favorable risk characteristics that should be focused on for a new rating plan. In short, there’s a lot of different things that an underwriter may do, but essentially the department is responsible for making sure that the proper product gets delivered to the customers is was designed for.

If Mrs. Shibb has an analytical mind and is not scared away by the down-and-dirty statistics and numbers of insurance, it would be a position within which she could learn the product and industry, and move pretty much in whichever direction she wants to go with the company.

Since the position is entry-level I wouldn’t worry about prior experience. Most of the interview is probably going to be behaviorally focused, finding out if she is the right sort of person for the job more than focusing on what she knows already. That being said a reasonable intellect and a background in Math/IT/Finance always looks good.

Excellent post. That last bit is important. Most insurance companies don’t really care what your degree is in, only that you have one. For underwriting they’ll want to be able to identify critical thinking, ability to understand the meaning and reasoning behind a guideline and to apply that guideline to an unusual circumstance–basically, does she have at least half a wit?

Yes, I’d say she’s at least a half-wit. :wink:

Thanks for the description Mirage, that’s pretty much precisely what I was looking for. A couple of follow-ups though:

  1. I’d kind of thought that actuaries did underwriting, but your note indicates that’s a separate functions. So what do actuaries do that underwriters don’t. (What’s the difference?)

  2. What sort of “behaviorally focused” questions should she expect, that is, what behaviors make for a good underwriter? (My guess is that I would be horrible at it, or hate it, but one never knows. And it’s not me looking for the job.)

I’d like to add another question to the mix:

I remember shows like the McLaughlin Group or whatever were Underwritten by the Chubb Group, always said in that manner, before each episode. WHat, the Chubbs decided the’d gamble that the show was fit to air?

I always assumed they were kicking in some dough, but it always sounded like they were doing something more notable…

In a nutshell, actuaries analyze data and set rate and loss reserve adequacy accordingly. Often they make the recommendations but someone else has the final say-so on where those things are actually set. Our actuaries are also involved in our reinsurance contracts and providing different reports for the company.

Also, to clarify something Mirage said, an “underwriter” that interacts with actuaries is more likely to be someone with (usually) quite a bit of underwriting experience who works in what many companies call the rates & filings department. They aren’t involved in the day-to-day evaluation of applications and renewals but work on setting the rules the front line underwriters go by.

Also, many companies have gone to automated underwriting. The relevant data is entered from the application and, if flags are raised by the program, only then does an underwriter get involved. Since the company I work for has gone to automated underwriting, the underwriters job has changed from looking at individual applications to focusing on the profitability of entire agencies they’ve been assigned.

Thank you all for your responses! Mrs. Shibb has passed the phone interview part of our game and now is on to the “Lightning Round” where the dollar values are doubled and our questions are just a little bit harder. (Actually, tomorrow she is going in for some “testing”, I’m not sure what sort. Maybe it’s that whole “half a wit” thing).

The insurance company I work for has a coupling postings for U/W (underwriting) trainee positions, here’s an amalgam of what we’re looking for:

Hopefully that will help you and the Mrs. a bit.