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What is an Underwriter Salary?

Posted on by Imarticus Learning

It is easy to mistake the role of an underwriter as someone who writes something. So, before knowing what the average salary of this position is, it is good to know the profile.

Who is an Underwriter?

As opposed to what the term suggests, an underwriter is someone who analyses and assesses the risks and liabilities involved in a loan or mortgage application. It is a person employed by a bank or a financial institution or a non-banking financial company (NBFC) to receive loan applications and check its validity against a set of standards and policies.

Although this role may sound easy, in reality it involves several concepts and terminologies in the finance and banking world. Because an underwriter essentially works on behalf of the company she works with – where accepting a fraudulent loan application can cause issues – it is an important job role.

With a very active growth in the finance world where borrowers – individuals and organizations – are growing by the day, the role of an underwriter has become more important.

What was a role that did not exist in the previous century – because other staff took care of it – is today a sought-after career role in India. All of this makes it a hot job for job seekers who have a financial or banking academic background.

Underwriter Salary – How Much Is It?

Although it is incorrect to suggest a solid number that will give you a blanket idea as to how much an underwriter earns, Payscale.com has come up with a number. According to its website, the average underwriter salary in India is roughly INR 4,85,000 (i.e. 4.85 lakhs). This is the annual package or the cost to the company (CTC). This figure is based on over 100 respondents who Payscale surveyed till May 2020.

It should be noted that this underwriter salary is for job roles in metro cities like Mumbai, New Delhi, Bengaluru, and Chennai. The numbers will change as per the location, the company, and the experience of the candidate. Research also suggests that individuals who took underwriting courses have reported higher incomes than average.

List of Underwriter Salaries by Experience

Here is a list of packages received by underwriters with different levels of experience. All figures imply annual salaries (gross income).

  • Fresher – Around INR 2,00,000 (2 lakhs)
  • Less than 3 years of experience – Between INR 4,00,000 (4 lakhs) and INR 7,00,000 (7 lakhs)
  • 5+ years of experience – Between INR 8,00,000 (8 lakhs) and INR 12,00,000 (12 lakhs)
  • 10+ years of experience – More than INR 15,00,000 (15 lakhs)

It should be noted that an underwriter’s role experiences substantial changes once the person has stayed in it for long. A person with more than five years of experience will soon move to other roles that will entail a lot of other tasks such as risk management.

Role of an Underwriter in a Glance

If you are an aspirant and are looking to take an underwriting course, here are some ground realities for you to consider:

  • You will be working on different types of loans and mortgages
  • An understanding of company policies and government regulations (SEBI, RBI, etc.) will be needed
  • It is an office job that will entail eight-hour shifts (or more)

As you gain experience, your role will change considerably. In terms of hikes and promotion, an underwriter’s role is not limited to loan assessment. You can even move to wealth management, portfolio assessment, and risk management roles. These pay relatively on a higher scale.
Begin your journey to a dream job. Enrol into an underwriting course today.

Also Read: What is Credit Risk Underwriting

What is the Role of an Underwriter?

Posted on by Imarticus Learning

Understanding the underwriting process

The term underwriting came from the practice of risk-takers writing their names under the total amount of risk they took. Before going into the details of the role of an underwriter, let’s get an idea about the underwriting process and what all it entails. In the most basics sense, underwriting can be explained as a process where big financial institutions provide their services to cover the financial risk for any liability arising out of an agreement.

It can also be understood on the grounds of leveraging the risk in case of an uncertain event. The financial institution guarantees monetary aid in case of any undesirable outcomes mentioned in the contract. Underwriting is one of the most important functions in the banking and finance segment.

The underwriting services can be provided by an individual or an organization wherein the risk related to a business or investment is undertaken by the service provider for a premium amount. The underwriters are primarily available in banking, insurance and stock markets to hedge the risks.

Now that we have a fair idea as to what the underwriting process entails, let’s delve deeper into the roles of an underwriter.

Role of an underwriter

So what exactly does an underwriter do? Well, an underwriter is responsible for hedging your risk in case of uncertain events. The roles and responsibilities along with the purview of an underwriter differ depending upon what type of underwriting services are offered by them.

Underwriters primarily function in three sectors; the banking sector, the insurance sector and the stock market. Let’s look at the role of an underwriter in these contexts to obtain a better understanding of the role.

  • Insurance underwriter: Insurance underwriters play a very crucial role in the insurance sector by hedging and dividing the risk associated with an insurance policy. Insurance underwriters are responsible for reviewing the application for risk coverage and conducting a thorough risk analysis.

    Based on their risk analysis they accept or reject the application. Insurance brokers and other parties submit the insurance applications on behalf of their clients which are reviewed by the underwriter who then decides whether to provide insurance coverage or not. In addition to this, the insurance underwriters also advise on risk management issues and determine the extent of coverage for various parties.

  • Mortgage underwriter: A mortgage loan underwriter is among the most common underwriters you’ll find. A lot goes into the mortgage application process. Thorough credit analysis is performed where the applicant’s income, credit records, cash flow, savings, etc. are assessed to determine the risk associated with loaning out the funds.

    Mortgage loan underwriters are responsible for overviewing the financial track record of the individual and based on their assessment, they approve or discard the loan for an applicant. They are also responsible for reviewing the value of collateral pledged for the loan so that the loan can be recovered in case of default.

  • Underwriting in the stock market: Underwriters in the stock market are responsible for determining the price of a security and identifying the risk associate with it. Let’s take an example to understand it. You must have heard about the IPOs where a company issues funds from the public by selling the shares of a company.

    In this case, investment banks provide their underwriting services to evaluate the correct price of a security by factoring in all risks and benefits. The insurance bank buys or underwrites the security issued by the business entity and then sells it to the public. Here, the insurance banks underwrite or hedges the risk associated with the sales of security.

A career as an underwriter can be very rewarding depending upon which segment or industry you are aiming for. You can opt for an underwriting course to obtain a comprehensive understanding as to how the market functions and learn the skills needed to get a job as an underwriter in a reputed organization.

Also Read: What is Underwriter Salary