What Do Underwriting Analysts Do?

What underwriting analysts do can be compared with putting together a jigsaw puzzle -- piecing together the information on a credit or insurance application to create the big picture. When the puzzle is complete, insurers and financial institutions know whether an applicant will make them money or cost them money.

If you've ever wondered why a business credit application asks questions about a spouse who is not involved with the business, or a car insurance application asks whether you smoke, then you've seen underwriting analysis at work. All those questions boil down to one thing: an applicant's potential risk to cost the insurer or lender money. Both employ underwriting analysts to weigh that risk against the prospect of income for the company, using criteria directly related to the applicant, and statistical criteria that may include demographic information and projected performance.

Every question on an insurance or credit application is designed not just to gather information about the applicant in question, but to open up larger channels of information that allow underwriters to gauge risk. Smoking, for instance, can be seen as a risk-taking behavior that might also shed light on risky driving habits. Knowing how many claims the insurer has paid out in the past to drivers who smoke, then, helps the underwriter to determine how likely the insurer is to pay a claim on the applicant.

Insurance underwriting analysts are the link between the computer screen or insurance agent and the insurance company, making the decision about whether to insure an applicant. The type of data that underwriting analysts gather and analyze depends upon the type of insurance. For life or health insurance, for instance, analysts will make decisions based upon the age, health and lifestyle choices and demographics of the applicant. Property analysts, though, use information about the property and the geographical area to determine risk. Most insurance underwriting is computerized, now, with insurance companies maintaining databases that analysts use to weigh an applicant's information against information gathered on applicants with similar characteristics.

Large financial institutions employ underwriting analysts to perform duties similar to those in insurance underwriting. The difference is, rather than determining risk for insurance purposes, financial underwriting analysts determine risk for loans or lines of credit. Finance underwriting analysts are usually employed to judge risk for businesses. Using credit histories, past business performance markers, projections for future earnings and other information, finance underwriting analysts help institutions determine whether or not a business will be extended credit.

Insurance underwriters earned a median annual salary of $67,680 in 2016, according to the U.S. Bureau of Labor Statistics. On the low end, insurance underwriters earned a 25th percentile salary of $51,290, meaning 75 percent earned more than this amount. The 75th percentile salary is $91,780, meaning 25 percent earn more. In 2016, 104,100 people were employed in the U.S. as insurance underwriters.