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How to Become an Underwriter

Are you a practical, analytical, and strategic thinker? Do you enjoy researching and drawing conclusions based on your research? You might be a good fit for a career as an underwriter where you can put your detail-oriented skills to work. 

Underwriters are financial specialists who work in insurance agencies, banks, and other financial institutions. They are responsible for deciding whether to approve a borrower’s loan or insurance application or not. When a potential borrower applies for a loan or an insurance plan, the underwriter is the one who evaluates the risk presented by the loan application. Determining risk is a complex process that requires good judgment and meticulous attention to detail. Underwriters assess whether a loan gets approved or not based on reviewing credit history, assets, driving record, medical history, criminal record, the size of the loan, appraisals, and other relevant information to decide whether to approve or decline an application based on the risk presented.

Underwriters look for patterns in financial data and determine which applications could have a high risk of financial losses. After performing a risk assessment, the underwriter approves or rejects a loan, or requests modifications by submitting a statement explaining their decision.

Sample job description

The underwriter is to issue credit decisions based on the documented borrower profile within the guidelines of the program and client requirements. [Your Company Name] is searching for an experienced underwriter. Underwriters are to meet the minimum daily production goals plus clearing conditions and perform within department audit standards. As an ideal candidate, you have expert knowledge in risk assessment, meticulous attention to detail, good negotiating skills, and proven work experience in a fast-paced environment working with tight deadlines.

Typical duties and responsibilities

  • Review, analyze, and verify loan applications and supporting documentation
  • Analyze loan risk and request additional information to determine coverage needs
  • Define the terms and conditions of the insurance coverage and the premium
  • Review loan documentation and vendor reports identifying possible fraudulent activity
  • Approve, request a modification to, or reject loan applications based on findings
  • Follow up with loan officers and management on potential clients
  • Reassess risk when policies come up for renewal
  • Help agents determine premium costs
  • Evaluate insurance claims for accuracy and the coverage amount
  • Prepare reports that detail risk assessment findings that contribute to the final decision

Education and experience

  • Bachelor’s degree in finance, business, economics, mathematics, or a related field
  • 3-5 years of underwriting or credit and risk analysis experience

Required skills and qualifications

  • Good analytical skills
  • Reasonable and sound judgment
  • Excellent problem-solving and decision-making skills
  • Working knowledge of databases and tracking systems
  • Solid organizational skills
  • Detail-oriented
  • Proven ability to work under pressure and meet strict deadlines
  • Strong interpersonal and negotiation skills
  • In-depth knowledge of underwriting regulations

Preferred qualifications

  • Experience working in customer service
  • Experience training new hires
  • Excellent math skills
  • Experience with Microsoft Office, spreadsheets, and other software programs
  • Experience analyzing financial documents

Typical work environment

Underwriters typically work in an office setting in a bank, insurance agency, or other financial institution. They spend most of their time working alone on applications at a computer. Some underwriters might have to travel to assess properties, meet with other financial professionals, and meet with clients to discuss policies.  

Typical hours

Underwriters generally work a regular 40 hour week from Monday through Friday between the hours of 9 AM and 5 PM. Occasional overtime may be required to meet critical deadlines. 

Available certifications

Underwriters work in a variety of industries and usually specialize in either mortgage loans or insurance plans. Many institutions offer certifications for underwriters, including:

  • Certified Residential Underwriter (CRU). The CRU is the standard for excellence in mortgage loan underwriting and is designed for underwriting professionals with at least 1 year of experience looking to elevate their skills. The training helps you to develop specific skills that contribute to reduced error rates, increased productivity, quicker decisions, and improved quality. Candidates gain insight into current influencing factors, regulations, and industry issues.
  • Certified Mortgage Underwriter (CMU). The CMU program is offered by the National Association of Mortgage Underwriters (NAMU), and is ideal for entry-level residential mortgage underwriters. The certification course includes underwriting essentials, real-world lessons, FHA/VA underwriting, and manual underwriting. Certification is issued after passing the exam. The certification must be renewed yearly.
  • Chartered Property Casualty Underwriter (CPCU). The CPCU professional designation is the premier certification in property-casualty insurance. The course is recommended for claim adjusters, underwriters, risk managers, brokers, agents, regulators, consultants, and other financial professionals. Candidates learn about risk management fundamentals, emphasizing managing risk data, modeling outcomes, and applying new risk technologies that prepare them to confidently meet the challenges of the risk management and insurance marketplace.

Career path

The path toward becoming an underwriter begins with obtaining a bachelor’s degree in business, economics, finance, or business. Graduates can gain experience in entry-level customer service, banking, insurance, or other business roles. From there, candidates can move into a position as an underwriter where they typically receive on-the-job training working under an experienced underwriter. This is where they learn best industry practices and company-specific practices. Underwriters generally work their way up from lower-value projects to higher-value policies. With years of experience and additional training, including becoming certified through the American Institute For Chartered Property Casualty Underwriters, a candidate can move into a senior underwriter position.

US, Bureau of Labor Statistics’ job outlook

SOC Code: 13-2053

2020 Employment119,400
Projected Employment in 2030117,200
Projected 2020-2030 Percentage Shift 2% decrease
Projected 2020-2030 Numeric Shift2,200 decrease

Social media has accounted for exponential growth in the amount of data available to underwriters in recent years, which can appear overwhelming. Through data analytics, data mining, and predictive modeling, underwriters can analyze large volumes of data to make better decisions and provide more accurate and timely insights into a customer’s risk profile. 

Artificial intelligence (AI) is helping underwriters improve policies and increase workflows. AI can help underwriters offer more accurate recommendations to customers for reducing their premiums and addressing outstanding issues by providing real-time underwriting analysis.

Innovation in business models and processes is challenging traditional working practices by underwriters. Machine learning (ML) is replacing time-consuming ‘age and amount’ charts. Video and aerial images, and drone imagery are reducing or eliminating the need for underwriters to travel to a site or property. By automating a number of manual tasks and cutting down the time spent in the field, underwriters are able to expedite claims validation and claims estimation reporting.