what is an underwriter?
As an underwriter, you assess the risks associated with various business decisions. For example, you evaluate loan applications by reviewing data and information on the applicant's employment history, among other factors. You consider the duration of their employment when determining the applicant's ability to repay the loan. If an applicant works full-time in a thriving company and has a stable income, they are likely a low-risk borrower.
In addition to evaluating loan applications, you assess risks related to other business decisions. For instance, you evaluate the potential risks and benefits when a company plans to go public. As an underwriter, you may specialize in specific areas such as mortgage, insurance, or business underwriting. To provide expert services, you need specialized knowledge in your industry.
Your job as an underwriter is complex since you assess the risks of financial and business decisions. When evaluating the level of risk, you conduct research and analyze the available data to make decisions. Hence, you require good research and analytical skills to excel in the role. Decision-making skills also help you weigh every decision and protect the business from risks.
Would working as an underwriter suit your analytical and decision-making skills? Then read on to find out what competencies and qualifications you need to thrive in an underwriter role.underwriter jobs
average underwriter salary
According to Job Bank, underwriters take home a salary of $100,674 per year. When starting your career, you are likely to earn $81,624 annually. The most experienced underwriters get earnings of $103,465 yearly.
what factors affect your salary as an underwriter?
As an underwriter, your salary varies based on your industry. For instance, an equity underwriter earns a different salary from an insurance underwriter. Mortgage underwriters also receive different earnings since the roles are unique. Aside from your area of specialization, your earnings also depend on your qualifications and work experience. Entry-level underwriters take home a lower salary due to their minimal experience. On the other hand, underwriters with over five years of experience can negotiate a higher salary because of their expertise.
The size of the company you work for also influences your earnings. If you work for a small organization, your earning potential is limited by the company's resources. You receive a higher salary when employed by a large organization or a financial institution with unlimited resources.
types of underwriters
Some of the different types of underwriters include:
- equity underwriters: as an equity underwriter, you oversee the issuance and distribution of company stocks. You play a crucial role in determining the price at which shares will be issued when a company transitions from private to publicly traded. Your expertise is also needed in assessing demand for the stock and analyzing the initial public offering value.
- insurance underwriters: as an insurance underwriter, you evaluate the risk an applicant implies. If the chances favour the insurer, you accept the application and outline the guidelines for the applicant. You also review claims submitted by policyholders. You determine the claim's legitimacy and the appropriate coverage amount based on your evaluation.
- mortgage underwriters: as an underwriter, you evaluate mortgage applications to determine the risks. For instance, you assess the repayment history, debt-to-income ratio and credit exposure.
- debt security underwriters: as an underwriter, you buy debt instruments like municipal and corporate bonds and sell them to other entities. You sell the debt instruments at a profit on behalf of the client.
working as an underwriter
Working as an underwriter requires good research and decision-making skills. Here are the duties, responsibilities and work environment of an underwriter:
underwriter skills and education
If you want to become an underwriter, you require the following skills and educational qualifications:
- university degree: you require a computer science, statistics or business administration degree. You can also pursue a degree in economics, finance or accounting. Consider completing a graduate degree in business management. Find internships and training opportunities to acquire the necessary skills and experience to work as an underwriter.
- certification: while an underwriting certificate isn't mandatory when starting your career, it is useful when applying for senior roles. For example, you can acquire certification from the Insurance Institute of Canada. Individual provinces and territories also have various training courses. For instance, you can complete a certified residential underwriter certification course offered by Mortgage Professionals Canada.
competencies and characteristics of underwriters
Some of the qualities of an underwriter include:
- computer skills: as an underwriter, you perform complex statistical analysis, which requires knowledge of using computer software. Every industry has specific software programs for underwriters to use in statistical analysis. It helps to be proficient in spreadsheet software and have experience using other complex statistical tools.
- analytical skills: as an underwriter, you require exceptional analytical skills to determine an applicant’s risks. With analytical skills, you examine every factor and assess applications appropriately before determining whether to approve or reject them.
- mathematical skills: as an underwriter, you require an aptitude for math. While the computation is done using computers, your math skills help you verify the accuracy of the computations and make informed decisions. Mathematical skills also help you determine the appropriate rate for insurance claims and the premiums that clients should pay.
- communication skills: as an underwriter, you liaise with various professionals to make informed decisions. You require excellent communication skills to communicate with stakeholders. It is vital to ask the right questions and talk to clients professionally and respectfully. Sometimes, you negotiate with customers, which requires confidence and exceptional communication ability.
Here, you will find the answers to the most frequently asked questions about the profession of an underwriter.
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