How To Become an Underwriter

Posted byDaniel Tannenbaum | Category Blog, Useful Information | Date 04 July 2019

An underwriter is the person or team responsible for deciding whether to approve a loan or insurance policy.

You may have heard the term that “your loan is in underwriting.” It means that your application is at the final stages and is with a team of individuals who are deciding whether or not you should be approved.

It is a vital role in an organisation and you will get the chance to work closely with all members of the company including managers, customer service terms, finance and brokers.

How do you become an underwriter?

There is no official degree to become an underwriter, like being a dentist or an accountant . It is common for people to start out in other roles in the organisation such as working in the finance department or customer service team and they get promoted to the position of underwriter or junior underwriter.

You can apply for be an underwriter with a firm and learn a lot of the necessary skills on the job. After all, every different company, even in the same industry has their own ways of underwriting, in terms of what tools they use, how they assess risk and what decisions they make.

If you want to go the formal route, you can look at the following which are good paths to becoming an underwriter:

  • A level 2 apprenticeship or level 3 advanced apprenticeship in providing financial services.
  • Level 2 CII (Chartered Insurance Institute)

What type of companies use underwriters?

  • Insurance companies – Pet, vehicle, personal, life, commercial, property and more.
  • Loan companies – payday, guarantor, peer to peer, personal loans and more
  • Credit unions
  • Credit card providers
  • Banks/Building Societies
  • Mortgage providers 

What are the roles and responsibilities of underwriters?

As an underwriter, you get to make the final decision if someone is approved or not, including how much they can borrow through a loan or how much insurance cover they can receive.

The role is based heavily on understanding risk, potential rewards and losses – and how your decision will cost the company money if a loan is not repaid or a huge insurance claim is paid out.

You will have to take historical data in terms of loans repaid, defaults and insurance claims made – and use this to make future informed decisions about loan applications and insurance policies.

For loan products, you will decide on the amount that the individual can borrow and the rate that they are charged – or decide if an application is declined for not meeting the criteria.

For insurance, you will determine the cost of their premium and the amount of cover that they are eligible for.

Your decisions and processes can be automated into a system hence a lot of products like credit cards and loans can give you an instant decision – this is so they can handle the large volume of enquiries they get in. Your application still may be subject to further checks.

However, if your job involves larger amounts of money such as guarantor loans or mortgages or large insurance policies, this early stages might be manual but the final decision and terms will take a more manual underwriting approach i.e an individual underwriter will see your application and make a decision. See our guide on how loans companies do underwriting.

What is the salary of an underwriter?

Salaries for trainee underwriters on graduate schemes can range from £24,000 to £30,000. For example, graduates on the two-year Lloyd’s Graduate Programme start on £27,000, with a salary increase of £1,000 every six months for the duration of the programme.

Qualified underwriters typically earn between £25,000 and £40,000.

Salaries for senior/lead underwriters start at around £40,000 and can rise to £90,000 with significant experience, depending on your location and area of insurance. With the right combination of qualifications, skills and experience, you can earn well in excess of £100,000.

What skills should an underwriter have?

Underwriters should have good mathematical and analytical skills and above all, have a good understanding of risk.

It is recommended to have good communication skills to be able to liaise with our teams in the organisation and to be decisive when making decisions.

Many firms that employ underwriters expect at least an A at GCSE maths and from University level, a 2:1 in business, management, finance, law or economics.

However, underwriting is open to people of all backgrounds, provided that they uphold strong analytical and numerical skills.