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I once told a very wonderful editor that an Insurance Underwriter was just about the same job description as the editor of a bunch of Bloggers. When I first started in the Business of Insurance my best boss ever used to kindly refer to underwriters as “people from a different planet.” Of course, we did our very best to make sure we kept our underwriters happy, because they had an amazing skill of causing extra work when we didn’t do our end of things correctly.
An Underwriter is an intermediary between the insurance company who offers to accept the liability for an insurance customers risks and issues the actual insurance policy.
Underwriting is a process of reviewing each Insurance Application and verifying the facts and placing the customer into the correct insurance product. Underwriting, requires knowing all the rules of the insurance company they work with and determining if a customer is correctly placed and enough premium is being collected.
Insurance companies off protection from financial loss by assuming the cost of a risk. Underwriters identify and calculate what the exact risk of loss might be for each policyholders. They help to establish correct premium rates, and write insurance policies to cover the policyholders risk. Insurance companies can lose business to other companies when the underwriter appraises risks too conservatively. Insurance companies may also be forced to cover excessive claims when the underwriting actions are too liberal.
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Insurance Applications with additional reports claims records, driving records, appraisers, Credit Scores and any other relevant information is used by an underwriters who will decide to issue the insurance policy and, if so, what premium to charge. The bulk of contact an Insurance Agent has with the Insurance Company will be with the Underwriters. They are the link between the insurance company and the insurance agent.
Technology is a vital part of underwriting computer applications have been designed to help underwriters manage risks more accurately. Some of the computer programs analyze and rate insurance applications automatically. The computer systems also recommend acceptance or denial of the risk, and will adjust the premium rate based on the companies programming. The advancement of computer systems has made underwriters better equipped to make good decisions and prevent the insurance companies from suffering catastrophic losses.
The Internet has affected underwriters, many insurance companies have direct links to important databases on the Internet which provide instant access to information. Most insurance companies that offer auto insurance for example have instant access to driving records and vehicle reports as well as insurance credit scores. This kind of access to application information has reduced the paperwork needed for underwriter’s to asses a policyholders complete risk.
Insurance Underwriters work in three categories in the Business of Insurance:
- Life
- Health
- Property and casualty
Life and health underwriters may also specialize in group or individual insurance policies. Property and casualty underwriters usually work in either commercial or personal lines insurance and often only on specific types of risk such as:
- Auto
- Homeowners
- Marine
- Liability
Some underwriters may work with property and casualty insurance companies that provide insurance through a Package Policy which covers several kinds of risks, under one policy or group of policies. Underwriter’s in these positions have to understand all of the different lines of insurance and how they relate to each other.
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- What is the Business of Insurance?
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