Four Ways to Deal with the Current Underwriter Shortage

It’s not a list you’d want your profession to be on — “The Most Endangered Jobs” — but that’s where insurance underwriters landed in 2016. Drawing on data from the U.S. Bureau of Labor Statistics (BLS), CareerCast compiled a list of the top 10 most endangered jobs. Insurance underwriters came in at No. 6.

The forecast back then was for underwriter employment to fall by over 9% as the underwriter’s role became more automated and the need for human involvement less essential. Artificial intelligence and digitization were going to reduce the need for these positions.

As it turns out, the industry hasn’t adopted new technology as quickly as anticipated, and today, we have a shortage of qualified underwriters. A search on the popular job site indeed.com shows nearly 5,000 open insurance underwriter positions, around 380 of them for surety.

BLS now forecasts a 2% decline in the job outlook for underwriters over the 2020–2030 period. “Despite declining employment,” BLS says, “about 8,300 openings for insurance underwriters are projected each year, on average, over the decade. All of those openings are expected to result from the need to replace workers who transfer to other occupations or exit the labor force, such as to retire.”

Clearly, the surety industry faces a challenge in closing this gap. Because surety is a little-known segment of property-casualty insurance, few job seekers are familiar with the surety business and the role of underwriting.

This lack of knowledge about surety hurts recruiting when the industry competes for top talent that may be attracted to higher-profile jobs in finance and technology. In addition, developing surety underwriting skills takes time. Even if we could fill vacant positions immediately, it might take years to eliminate the current shortage.

Couple this with the fact that the Federal Reserve Bank of St. Louis estimates that over 5 million workers have left the labor force, and you can see that we have a problem.

There’s no easy solution, but here are four ideas sureties should consider:

1. Recruit smarter: Surety companies must reach outside the surety bubble to attract new talent. Sureties need to be on the career websites and use the keywords that job seekers are likely to employ in their searches. “Technology” and “data” are two keywords that today’s top candidates look for. Companies also need to pay for better placements on these sites so that surety underwriter jobs are more visible.
2. Create and promote training positions: There are many good training opportunities for underwriters, and these need to be better advertised. Some posted trainee salaries are as high as $75,000, but how many job seekers know about them? The Surety & Fidelity Association of America has created scholarships and internships to address the surety training gap, but the industry needs to do a better job of promoting them.
3. Focus on the positives: Surety offers good benefits and competitive salaries. More importantly, in this time of COVID, many underwriter positions can be performed remotely. Underwriting should appeal to those seeking good pay, stability, and workplace flexibility.
4. Continue innovating: Sureties are automating their workflows so that underwriters can work more efficiently and approve bonds faster. Sureties are also looking at other ways to modernize underwriting. For example, Tinubu's Innovation Lab tests deep analytics and blockchain technology on its platforms.

While sureties explore how AI can better predict underwriting risks, it’s clear that human intelligence and decision-making skills remain very much in demand. Underwriters are here to stay, and the industry needs to figure out creative ways of replacing those who are retiring.