Underwriter as a Profession: Good or Bad?
An underwriter is a financial expert who serves in the insurance, banking or stock market industries. Their main job is to review, research and evaluate all the risk factors of accepting a new client or making a new financial decision. Sometimes, an underwriter can be an entire organization, and in some other cases, a person does all the evaluation and takes all the responsibility. After assessing all the potential risks, an underwriter makes the final decision to accept, modify or reject a business decision.
Is underwriting good as a profession?
When choosing a career path, the most important thing is to look at all the different aspects of the profession. Underwriting might not be one of the conventional career options, but in the present scenario, it holds endless opportunities. At first, you can start from an entry-level position and over time, you can look for some better opportunities for career advancement. After gaining more insights into the industry, things get a bit easier. If you want to go for a profession that is challenging and interesting at the same time, there can be no better option than this.
What does an underwriter do?
The main responsibility that an underwriter holds is to determine whether the risk of a new business decision outweighs the benefits for the organization or not. However, the role of underwriters can slightly vary on the basis of the industry they are in.
In the insurance industry, an underwriter has to collect all the relevant information about customers who apply for a policy. After a detailed analysis, it is determined what are the risk factors involved in insuring a particular client and how the insurance company can ensure a profit-making deal. In other words, they do a lot of research based on factors like the person’s age, medical history etc. and make the decision whether to offer an insurance policy or not.
In the banking sector, underwriters play a crucial role in checking the creditworthiness of a customer. They do it by appraising the applicant’s credit history. They help the bank decide whether to approve a loan or not. This is the most common type of underwriter. Buying a house is a big decision and getting loan approval for it is an even bigger challenge. The approval of a loan application depends on a number of different factors like monthly income, credit history etc. An underwriter carries out a detailed research about the applicant and decides whether the risk is manageable or not.
In the stock market, an underwriter determines the risk and price of a particular security. Generally, underwriting is one of the first few things in the process of launching an IPO (Initial Public Offering). Whenever a company decides to launch its IPO, investment banks buy the securities from the issuing entity and then sell them in the market. This process helps both parties to make a profit. The issuing company easily raises the required capital amount and the investor bank makes a profit in reselling. In this entire process, underwriters play a very important role as they help the investor bank to make a more informed buying decision.
How to become one?
To become an underwriter, you have to get a bachelor’s degree in any field. However, employers do prefer candidates who have completed some kind of coursework in business, law, and accounting. If you do not have any such certification, experience in the insurance or finance field will also be beneficial.
Underwriting is a job that requires an individual to be decisive. If you are someone from a finance background and have exceptional analytical skills, you can definitely consider this as a career option.