Insurance Underwriter Interview Questions

Responsibilities

Insurance underwriter responsibilities may include:

• Analyzing statistics to assess potential risks
• Periodically re-analyzing an insurer’s risk
• Developing insurance plans that benefit the company and the insurer
• Assessing medical profiles
• Inputting data into pricing algorithms

Skills

Insurance underwriters analyze the risk associated with insuring a person or asset. In order to make a well-informed decision, a skilled insurance underwriter will:

• Possess a keen eye for detail when going over insurer files
• Utilize critical thinking to develop effective insurance plans
• Effectively use computer software and data entry systems
• Utilize organizational skills to keep track of insurer files
• Possess a strong work ethic to go over data and statistics daily

Qualifications

To gain an entry-level position, candidates are typically required to have a bachelor’s degree. A degree relevant to this field will be more favorable. In addition, candidates can enroll in training courses to acquire special certifications.

If you’re getting ready to interview for a position as an insurance underwriter, you can prepare by researching the company as much as possible. Learn about the 9 things you should research before an interview.

Salary

Salaries for insurance underwriters range between $60K and $89K with the median being $72K. 

Factors impacting the salary you receive as an insurance underwriter include:

• Degrees (associate's, bachelor's)
• Years of Experience
• Location
• Reporting Structure (seniority of the manager you report to, number of direct reports, and office staff)
• Level of Performance - Exceeding Expectations

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Insurance Underwriter Interview Questions

Question: What sources do you use when performing a background check on a client, and what items in their background would raise a red flag regarding underwriting their policy?

Explanation: This is an example of an operational question. Interviewers will ask this type of question to determine how you go about doing your job. Operational questions are best answered by describing the process, tools, and sources you use and the steps you take to complete the task the interviewer is inquiring about.

Example: “When performing a background check on a client, I use a variety of sources. These include the White Pages, several of the credit rating services, including Experian, Standard & Poor’s, Moody’s, and a background checking app that is proprietary to our company.” 

Question: How do you go about researching and locating information about a client’s finances?

Explanation: This is both an operational question as well as a follow-up question to the previous one. Whenever you provide an answer to an interviewer’s query, you can anticipate follow-up questions. These enable the interviewer to learn more about the topic you’re discussing or dig deeper into your background and knowledge. Keeping your answers short will encourage the interviewer to ask follow-up questions.

Example: "As an underwriter, I understand the importance of accurate and comprehensive information. Therefore, I have developed several sources I can use to explore an applicant’s background quickly. For financial information, I rely on the credit bureaus as well as the client’s financial institutions. If they previously had insurance, I contact these companies, most of which are willing to share the information.  I will not make a recommendation until I’ve exhausted my sources for financial information."

Question: Can you describe how you stay current with applicable laws and regulations as well as contemporary insurance industry practices?

Explanation: Staying current with laws, regulations, and industry trends within the insurance industry is critically important. It is also challenging because the laws, regulations, and trends change frequently. The interviewer will ask you this type of question to ensure you are staying up to date in your knowledge of the industry.

Example: “Staying current with all laws and regulations applicable to the insurance industry is almost a full-time job. There are several ways I accomplish this. I read several industry journals, blogs, and online newsletters. I also subscribe to a service that provides me with updates regarding legislative actions impacting our industry. Together, these sources provide me with the information I need to stay current.”

Question: Some business insurance policies you work on will require multiple signatures and approvals. How do you resolve conflicts that may arise between stakeholders?

Explanation: This operational question is attempting to learn about your negotiating and communication skills. To be effective as an insurance underwriter, not only do you deal with facts and figures, but you also have to deal with people. Your ability to do this will help you obtain the job.

Example: “Although not often, sometimes I encounter a situation where two parties involved in an insurance policy disagree on some of the elements. I strive to reach an agreement by carefully explaining the details of the policy and then asking them about any objections they may have. I try to address these and suggest how the parties can compromise to reach an agreement, if necessary. It is usually effective and results in the parties agreeing to the revised policy.”

Question: What software programs and applications do you use to evaluate clients and issue your underwriting recommendations?

Explanation: An interviewer will ask this type of question for two reasons. The first is to determine your expertise in this area and your familiarity with the software products use by insurance underwriters. The second reason is to confirm you are familiar with the applications their organization currently uses. Hopefully, your pre-interview research has helped you understand the apps they use so you can address this. If you’re not familiar with their apps for some reason, you may want to suggest ones you are familiar with as viable alternatives to what they are currently using.

Example: "There are a significant number of applications insurance underwriters use when evaluating applicants for policies. These include Applied Rater, Instec, Bridge Rating, Bridge Underwriting, and OneShield. I also use Microsoft Office Suite to compile reports. The apps I most frequently use are Word and Excel.” 

Question: Have you ever denied a client’s policy request, and if so, for what reasons?

Explanation: It would be rare if you were an insurance underwriter who hadn’t denied an application. The interviewer will ask this question to confirm that you have turned down some applicants and determine what criteria you used to make this decision. The criteria are by far the most critical part of your answer. You should be reasonable so as not to screen out viable applicants, but not so lax as to allow unqualified candidates to receive a policy.

Example: “I would estimate that I approve approximately 90% of the applications I process. The ones I deny usually have several red flags which indicate they are not a good risk. Some of the red flags are bad credit, criminal backgrounds, overdue loans, and other obvious issues. I also look for things such as unresolved litigation or long-term credit issues that have remained on the applicant’s records longer than they should have.”

Question: What actions would you take if you were undecided about whether a risk is worth taking?

Explanation: This is another follow-up question to the previous one. You should always anticipate follow-up questions. The two types of follow-up questions are clarification and exploration. A clarification question indicates you may not have answered the previous question clearly or thoroughly. An exploration question indicates the interviewer is very interested in the topic you’re discussing and wants to learn more.

Example: “As I mentioned in my last answer, there are only a small percentage of applications which I deny. If an application is borderline and I’m undecided about whether we should take the risk, I take the time to collect more information from different sources. I may even contact the applicant to ask them about some of the issues I uncovered to gain an understanding of why the issue is still on their record.  On most occasions, this will clarify my thinking and enable me to move forward to approve the application.”

Question: Would you follow your gut if you felt it would be too risky to offer insurance to a client, even though you hadn’t found enough evidence to disqualify the client?

Explanation: The interviewer is continuing to ask about the process you use to approve insurance applications. With this question, they are attempting to learn whether you err on the side of facts or intuition. As with most professions, good insurance underwriters use 80% facts, 10% experience, and 10% intuition.

Example: “Since I’ve been doing this job for quite some time, I've developed a kind of sixth sense when it comes to approving applications.  Naturally, I depend heavily on the information I collect, including the client's background check and financial information. However, based on my experience, I am usually able to determine whether a client will be a good risk even before I have completed the formal evaluation.  If for some reason I am still undecided, I trust my gut to either approve or disapprove their application. To date, this has always worked out for me.”

Question: What process do you use to detect insurance fraud?

Explanation: An interviewer will ask you about insurance fraud to confirm you have a strong understanding of this and have developed techniques that enable you to detect potential fraud. They also want to ensure you’re staying up to date on any new fraud schemes that are threatening the industry. You should have a firm grasp of this and be able to talk about your understanding of insurance fraud.

Example: “Unfortunately, there’s a great deal of fraud in the insurance industry. This ranges from fraudulent claims filed against legitimate policies to individuals taking out new policies for the sole purpose of committing fraud. This is why I conduct a thorough and comprehensive background check on any new application. Additionally, as part of my continuing education, I try to learn about new fraud schemes as they evolve and develop techniques to detect them when reviewing an application.”

Question: Can you explain debt and loan-to-value ratios and describe how you use these ratios when evaluating a client?

Explanation: This is a technical question. Interviewers will ask technical questions to understand your knowledge of the industry and the practices within it. Technical questions are best answered concisely and directly with little embellishment. The interviewer will ask follow-up questions if they need additional information or wish to explore the topic in more detail.

Example: “A debt-to-value ratio is the amount of debt an applicant is carrying on the asset they’re looking to insure. The ratio is determined by dividing the debt by the market value of the asset. High debt-to-value ratios indicate the applicant has little equity in the asset, and therefore, not a lot to lose. This is one of the red flags I look for when reviewing an application. It could indicate a high level of risk or potential fraud.”

Additional Insurance Underwriter Interview Questions

• What kind of experience do you have with insurance operations?

• What is your preferred line of insurance to work with?

• When have you used data and analytics to make an informed decision? 

• What are the elements of a decision support system?

• What would you do if you’re expected to take one stance and an agent wants you to do the opposite?

• How familiar are you with data aggregator services?