Too many college graduates lack awareness of the vast career opportunities available to them.
To help alleviate this problem, Home at 30 will ask people in various industries (starting with yours truly) to share their experiences and insight.
I had already graduated from Wake Forest when I first heard about property casualty insurance. As someone who had been interested in banking, this intrigued me the more I learned about it.
I’ve now worked in the industry for three years. I dreamed of this day ever since I was 12, right? Right…
Insurance isn’t the sexiest business in the world and you won’t hear a peep about it on most college campuses. However, many people who work in the industry consider it the best-kept secret around.
Insurance touts great job security (insurance is a mature, well-established industry), work-life balance, and the potential to make some great money. Oh yeah – and they’re desperate for young talent.
Do you want to break into the insurance industry as an underwriter? Let’s find out:
What’s Property-Casualty Insurance?
In a nutshell, property-casualty insurance companies provide protection for property damage (property) and legal liability (casualty) of their insureds. In exchange for premiums (the money paid for insurance), insurance companies offer consumers a wide variety of insurance policies, including worker’s compensation, general liability, property, professional liability, and much, much more.
The typical method insurers use to bring in business is through broker relationships. The brokers are licensed representatives for the business, person or entity seeking insurance. They establish the connection between the consumer (the insured) and insurance company (the insurer). Brokers are typically paid a percentage of the policy premium – called a commission – for their services.
In the same way that you have auto insurance to reimburse you for when things go wrong, the property-casualty insurance industry reimburses companies/people in a wide variety of ways.
What Does An Underwriter Do?
As an underwriter, you play the company gatekeeper. You decide what business your company brings in and on what terms. Think of it as being half salesman and half analyst.
On the sales side, you’re tasked with writing (get it? underwriter) new business to grow the company by:
- Marketing your products and services to brokers to solicit their business
- Negotiating premiums and policy terms and conditions with brokers
- Differentiating your products and services from your competitors to win accounts
On the analyst side, you want to manage a profitable portfolio of business by:
- Evaluating the risk characteristics of potential insureds submitted to you
- Determining what premium and policy terms and conditions you’re willing to offer
Very exciting, am I right?
The name of the game is profitability. Underwriters are vital to their companies because what they do on a daily basis directly affects the bottom line. The potential for loss is often far larger than the account premium. Bringing in one piece of bad business could cost the company millions of dollars, so make smart bets! The on-the-job learning environment of underwriting makes it a great position for breaking into the insurance industry.
What Are the Benefits of Being an Underwriter?
Underwriters are uniquely positioned in the insurance industry because they interact with many roles. Internally, they work with other underwriters, actuaries (the math geeks helping to determine the prices underwriters work with) and claims representatives (the poor souls dealing with people who have filed claims with the company). Externally, they work alongside brokers and reinsurers (who provide insurance for insurance companies).
As you can imagine, underwriters can develop a broad perspective of the industry they operate in. Underwriting is a great way to break into the insurance industry because they:
- Learn how the insurance industry operates
- Develop a well-rounded skill set by analyzing risk, building relationships, and selling/negotiating
- Typically enjoy a great work-life balance
Working 9-5 is generally expected of those in the insurance industry (depending on location and culture), and many people work from home because not much is needed besides a laptop and a cell phone. Production underwriters (those who need to write new business) are also generally expected to stay visible with their brokers during the week, which can mean lunch, dinner, happy hours, and/or sporting events.
Some companies provide a formal training program for their underwriters, which is a fantastic way to get acclimated to the insurance business. These underwriters are highly sought after by other insurance carriers because of the skills they acquire.
What Do Insurance Companies Look For in a Candidate?
There’s a lot to learn about the insurance business as an underwriter. However, entry-level candidates aren’t expected to have more than a basic knowledge about the industry and the underwriting role.
In general, companies want candidates who are analytical (quantitatively and qualitatively) and results-driven. It’s also important to manage your time efficiently and communicate effectively. Because it’s a relationship-driven business, the most responsive underwriters tend to perform the best. Being able to manage various competing priorities is crucial to success as well.
On your resume, you’ll want to use numbers to bring life to what value you bring to the table. Highlighting your problem solving ability and communication skills is important as well, and any talent you have on the golf course is just icing on the cake. You don’t need any certain degree to break into insurance. However, candidates with undergraduate insurance/risk management degrees get scooped up very quickly.
Anything Else I Should Know?
The insurance industry is expected to add 200,000 new jobs by 2018, and the unemployment rate in the insurance industry is less than half of the national average*. Additionally, 25% of the workforce will be retirement age by 2018, and companies are trying to find ways to compensate for that impending loss**.
Unlike the finance industry, insurance has historically struggled to attract college graduates. In turn, the Baby Boomer generation makes up a significant portion of the workforce. Unfortunately, companies will lose valuable industry knowledge and experience when those retirements hit. To transfer this knowledge and experience and mold the next generation of insurance leaders, it’s important that these companies groom young talent.
According to PayScale.com, the average starting salary for a property and casualty underwriter is $57k per year. The mid-career salary (5-10 years’ experience) is $75k. These numbers can vary widely based on location and company. I know plenty of people who have less than 5 years of experience and make six figures.
Are you interested in working from home? That’s also becoming increasingly common in the insurance industry. I avoid a 1.5 hour commute each morning by working from home 3 to 4 days per week.
It’s often said that once you work in insurance, you stay in insurance. It’s very common for employees to jump from one company to the next and switch between the broker and carrier side. It’s also worth noting that while business formal was common years ago, the industry is almost entirely business casual now.
Underwriting is just one role in an industry filled with opportunity. Are you ready to break into the insurance industry? Do you think it would be a good fit for you? Leave a comment below.
All opinions expressed on this blog are solely those of Home at 30 and are in no way affiliated with any other organization or institution. The purpose of this blog is to give general education and information about investing, wealth, careers, and college; It is not intended to be professional advice.
After earning an undergraduate degree in Economics and a Master of Arts in Management at Wake Forest University, Josh has paid off over $90k in student loan debt in 3.5 years. By founding Home at 30, Josh wants to help you make the most of college, build a successful career, and achieve financial independence.