If you’ve tried to get a loan or insurance policy recently, you know how stressful trying to get approved can be. Mortgage applications and insurance policies have to go through rigorous processes to get approved. So who is behind the scenes to decide whether to approve these requests? That would be an insurer.
What is a subscriber?
An underwriter is the party who assesses and assesses the risk of a mortgage, loan, health insurance policy, or other investment and decides whether or not it is worth the risk for your business.
Underwriters are more common in environments that carry risk more consistently. If you, as an individual, are dealing with an underwriter, chances are you are dealing with a major life event: trying to get insurance for a major purchase, applying for a mortgage on a new home, or selecting a health insurance policy. Each risky industry has its own underwriters with a strong understanding of the specialized knowledge of that field, as well as a general understanding of how risk works in finance.
What do subscribers do?
Using in-depth knowledge of their field and available data and statistics, an underwriter determines whether the inherent risk of a loan or policy is worth it to their business. Based on the degree of risk involved in the investment, an underwriter decides how it should affect the deal, should it go through.
Let’s say you are a subscriber to a health insurance company trying to determine whether to approve a policy and what type of coverage to offer. It would look for relevant information such as the person’s age, medical history, and family history. It would then input this information into underwriting software that would help it determine if a policy should be offered and at what premium.
The specific information needed to make a decision varies by claim. Naturally, a subscriber to a health insurance company investigates the medical history; An underwriter risk-assessing a car loan, on the other hand, would take a closer look at credit score and payment history, among other things.
Being a subscriber can mean walking a fine line. They cannot make loans or policies to risky parties since it is their employer who will bear that risk, but the degree of risk that is acceptable, and what can be offered to an applicant based on their specific risk profile, is what the subscriber has to determine. Can the party receiving a loan realistically repay it? And if so, what interest rate would be necessary to compensate the lender for the risk of the party defaulting?
Each case has a unique set of details that must be evaluated, especially in fields with more complex policies. Some cases are very simple and do not require extensive analysis and investigation. However, even in these cases, underwriters are still needed to help guide people through the loan and be available if sudden extenuating circumstances turn the tide.
What are the different types of subscribers?
So what are these various industries that underwriters can work in? What are these risk environments? These are some of the most common forms of subscribers.
mortgage insurers
Mortgage underwriters are among the most common types of loan underwriters. A home mortgage is inherently risky for the lender, even when lending to someone with great credit and high income.
Underwriters in the mortgage industry have to be incredibly careful to make sure the risk they take on isn’t unmanageable, considering how many mortgages they make are in the six-figure minimum. Credit score and history are factored into mortgage decisions, but there are many other factors that must be considered as well. Is there verifiable proof of a stable job and income? How much debt does the mortgage applicant have compared to their income?
Many factors, both within and outside of the mortgage applicant’s control, must be considered to ensure that the mortgage is fair to everyone involved.
loan underwriters
Although mortgage underwriters are the most common type of loan underwriter, other loans also require a party to assess risk. Car loans and other personal loans are common, but banks also lend to other businesses, and each of these types of loans may require an insurer.
insurance underwriters
Insurance underwriters are another particularly common group. They assess the risk profiles of individuals and businesses seeking various types of insurance to make approval decisions and determine premiums and policy details. Some insurance underwriters specialize in health insurance, while others specialize in life insurance, auto insurance, or property insurance.
securities underwriters
Securities underwriters often work with investment banks to help corporations facilitate initial public offerings (IPOs). They assess risk to help determine the right share price for an initial public offering, then buy shares and offer them to the public. One of the biggest risks here is that if an IPO doesn’t create enough public interest, the facilitating investment bank may get locked in and own more shares in the underlying corporation than it bargained for.
How do you become a subscriber?
Underwriters are expected to have a bachelor’s degree, but most educational institutions do not offer specific programs for underwriting. Individuals interested in an underwriting career can choose from a number of relevant specializations and courses. Specializations in finance, economics, business, and mathematics are common in the underwriting field.
In addition to education in a related field, aspiring subscribers must have excellent computer skills and attention to detail, two particularly important elements of the profession.
Entry-level positions typically do not require certifications other than a relevant bachelor’s degree, but new hires typically receive extensive on-the-job training from their superiors as they are trained in their specialized field.
How much money do subscribers earn?
Underwriter salaries vary considerably by state and specialty. That being said, the average salary for underwriters in a variety of fields is around $72,000, according to career website Indeed.com. As in most fields, salaries increase with experience.
According to Indeed, the cities that pay the best subscribers are New York, Chicago, Charlotte, Dallas, and Denver, with subscribers in New York reporting an average salary of around $109,000.
