What Is Insurance Underwriting. Insurance underwriting is a common but vague term referring to the process of determining risk for potential clients. Insurance underwriting process provides you with knowledge and understanding of the role of underwriting including identification, assessment and acceptance of risk, rating and relevant financial factors.
In the early days of marine insurance, the details of a ship or cargo to be insured would be described on a slip. Insurance underwriters review applications for insurance coverage, and then either accept or reject a potential policyholder based on their risk analysis. If too much risk is allowed, the insurance company will pay out.
Insurance underwriters evaluate the risk and exposures of potential clients.
Insurance underwriting is common to all markets and fundamental to the business of insurance, no matter where in the world it takes place. The process gauges how likely it is that the insured will make a costly claim and whether the insurer will lose money by issuing the policy. It goes by the principle that every risk in the insurance pool should pay an equitable premium. What is life insurance underwriting.