So I have thought about doing something over this field for quite awhile but didn't know how much to go into and whatever. Depending on the response I will depends on whether I will expand further.
I really wanted to talk about the position of Commercial Underwriter.
Specifically property and casualty dealing with the major companies (AIG, LibertyMutual, etc.)
What is a commercial underwriter?
A commercial underwriter is the liason between the insurance broker and the insurance company, which prices the policy for the coverages requested by the broker. They do not calculate the pricing formulas (job of actuaries) however they piece together the prices, create relationships with brokers and then bind the policy. They command a "book of business" which is all of their policies they have approved and are reviewed by the P&L of their book as well as new business being wrote. There is little financial knowledge required being known other than possibly claims amounts, and other types of metric and has quite a bit of legal understanding (most of insurance is just a legally binding contract which mitigates the financial cost of risk).
What does a commercial underwriter get paid?
This is for Dallas, TX. Most majors start out their underwriters at 51-60k. The latter is for the higher named companies (AIG) and for specialty lines (will describe later). This is comparable to Big 4 starting pay however for much less hours (normal 40 hour work week). You'll see pretty normal pay raises, good PTO, holidays, etc. After 3 or so years you will be promoted to a Sr level and then after about 3 years you will have a manager promotion. After that it depends on your desire to move around/develop skills, but you could easily hit Chief Underwriting Officer by 35ish if you're aggressive.
The normal progression goes:
Commercial Underwriter (2-3 years, obtain CPCU) mid-50's
Sr. Commercial Underwriter (2-3 years) low 80's
Underwriting Manager (2-5 years) break 6 figures
Jr. VP of Underwriting (3-5 years) 125+
Chief Underwriting Officer (xxx) 200k
Insurance really gives lots of merit to performance and experience over politics unlike many other business facets. Although this is the normal progression, many never reach about the Sr. Underwriter normally because of lack of desire (tons of Type B in underwriting). A go-getter going into underwriting could easily expect the lower end of that time frame to progress.
There aren't many honestly. I'd say the three biggest exit opps is specialty underwriting, brokerage and risk management.
Specialty underwriting is writing commercial insurance coverages for specialized liabilities. For energy (tons of pollution and transportation liabilities needing to be wrote) for construction (hoisting/rigging and equipment costs which can get complex with the blurred lines between equipment/vehicles and tools) and even cyber insurance (Target/Home Depot had huge losses in cyber attacks which recouped a large penny from having cyber protection insurance.
- In these lines you normally have 1-3 years in normal underwriting writing general risks and then you lateral to a specialty firm or to a different specialty division and you will see salary increase of approximately 15-20% of the above mentioned salary progression. Then you have a better opportunity of going to a brokerage working with these clients or to industry handling the risk/insurance management for an industry leader.
- Then the next leader in specialty lines in reinsurance which is underwriting billions of dollars of coverage (it's pricing the risk for entire portfolios of insurance).
Brokerage is another route taken by many. After getting a foundational knowledge of commercial insurance, you develop a better position to meet with and sell insurance to those who you were originally underwriting. You will have a strong idea of insurance gaps, missing coverage, ideal coverage and be able to up-sell to your clients appropriately. The salary in commercial insurance brokerage is majorly commission based and after 2-3 years in the business you could easily expect 100k+ salaries nearing 200k-300k if you're good at what you do. The top 1% in this field do EXTREMELY well.
Lastly risk management seems to be a less obvious career which is assumed by underwriters. Either going to get an MBA or directly after receiving your CPCU you will have the opportunity to become a risk manager for many in-house risk departments at F500/F1000 companies. There will be a financial component of knowledge required where you may have a deficiency but a MBA in Finance or possibly a CFA type certification normally can help you transition into more high level jobs. Large portions of a risk department are dedicated to the corporate insurance culture.
Why I Am Considering This Career?
A solid 40 hour week without much overtime, mixed with strong resources to learn very specialized information in a very under-manned industry is what draws me to this stuff. My goal is to get into a general commercial underwriting gig (or energy if able out of undergrad). Work for 3-5 years obtaining my CPCU, ARM and then going to a top regional MBA and landing a gig at a top commercial brokerage as an energy insurance broker.
I currently work in risk and insurance and have researched this stuff and met with individuals in this and related to fields. If you have any questions feel free to ask.