David Fanning finds underwriting has plenty to recommend it to graduates with an eye on the long-term...
Whatever else happens in the insurance industry, there will always be a need for underwriters. "People will go on needing to insure against risk, and no matter how many smart software programmes are introduced they cannot replace the experienced underwriter," says one engineering underwriter, cautiously waiting for the outcome of yet another merger. In his view, it is a profession that is less subject to recession and layoff than most others.
It seems like the more glamourous end of the insurance process, weighing up the risks involved in a proposal and taking a gamble on the likely outcome. In reality, of course, it's a much more structured and even mundane business.
Information, communications and data appraisal technology is playing an increasing role in the underwriter's job, as computer software enables an underwriter to manage risks more efficiently and accurately.
For entry-level underwriting jobs, insurance companies tend to prefer college graduates who have a degree in business administration or finance, although recruitment to underwriting can be from any field. In many instances, a background in science or engineering could be particularly useful and, for some posts in life assurance, biological or medical knowledge could be helpful. Increasingly, information technology experience and skills are seen as essential.
Many graduates start their careers on an insurance company's or broker's graduate training programme and move into underwriting at the end of their training scheme. Alternatively, some underwriters start their careers in a different department of an insurer's or broker's office and then move into underwriting, having gained some general insurance experience.
The way forward for aspiring underwriters is through the professional examinations of the Chartered Insurance Institute (CII) and by on-the-job training, although the first year or two may involve nothing more than fairly routine tasks. There is a daunting amount of technical knowledge to be absorbed at this stage.
"We consider that underwriters should be CII-qualified," says Pam Byrnes of the International Underwriting Association of London (IUA), "but we recognise that many of our member companies have their own training schemes. Our concern is that, while these schemes are of a high standard, there is no general recognition of their merit in the market."
She says that the IUA and Lloyd's are liaising more closely on matters of training: "The IUA/Lloyd's forum believes that there is a need for a different approach to education and professional qualifications for underwriters."
However these issues are resolved in the future, employment of underwriters is forecast to grow more slowly than has previously been the case. As insurance companies turn to 'smart' software systems to analyse and rate insurance applications, this trend looks likely to continue.
Mergers and acquisitions of insurance companies are also expected to continue to result in downsizing. Most job openings will result from the need to replace underwriters who transfer or leave the occupation, although some underwriters are moving into the area of product development. There, they help to set the premiums for new insurance products and schemes.
The best job prospects are going to be for underwriters with the right mix of skills and credentials. Sound professional and specialist knowledge, excellent communication skills and technological savvy will identify strong candidates..
The signs are that the future may be brighter for underwriters in life and health insurance than in property and casualty insurance.
Oh, and it helps if wannabe underwriters have a fairly tough and resilient approach to life as insurers and brokers focus on the bottom line. Every injured party needs a scapegoat, and guess who gets to be in the middle each time...