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Why Do Insurance Companies Have an Underwriter?

If you have ever purchased an insurance policy or even seen an advertisement for insurance on television, then you have most likely heard of an insurance underwriter. Chances are, however, you might not really understand what an underwriter does or how underwriters affect your particular insurance policy.

Fortunately, though, you've found a great website to get all of your questions answered quickly and accurately. In the next few paragraphs, you will find out what an underwriter does, why they are important, and even how to make underwriting your career goal!

The Need for Insurance Underwriters

Popular opinion in the insurance realm is that as long as insurance is considered a necessity for people and businesses, there will always be the need for insurance underwriters. In short, underwriters are insurance for the insurance companies themselves. Insurance companies protect individuals and organizations from financial loss by assuming billions of dollars in risks each year. An underwriter reviews each policy to decide how much risk is involved and, based on this decision, establish premium rates and write policies that cover these risks. This is an excruciatingly important job; if an underwriter is too conservative, the insurance company will lose business to its competitors, but a company may have to pay excessive claims if the underwriter is too liberal.

Underwriters generally specialize in one of three major categories: life, health, or property and casualty, though life and health underwriters may further specialize in either group or individual policies. Additionally, underwriters rely heavily on modern technologies such as the Internet and computer applications called "smart systems" to effectively determine the risk in accepting a new client. One of the drawbacks of being an underwriter, however, is the lack of physical activity; though the offices of underwriters are generally comfortable and pleasant, underwriters should expect to be stuck behind a desk for at least 40 hours a week, and those with high energy levels might find this somewhat tedious.

If underwriting appeals to you, you might want to consider making this your career goal. Most large insurance companies prefer college graduates who have a degree in business administration or finance with courses in accounting, though a bachelor's degree in any field with additional courses in business law and accounting may suffice. If interested, check with your academic advisor for appropriate courses and possible internships. Also, feel free to do further research, as this article is only meant to be a starting point. Good luck!

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