What is the role of an underwriter in insurance?
Insurance underwriters use computer software to analyze risk for determining whether to approve an applicant. They take specific information about an applicant and enter it into a program. The program then provides recommendations on coverage and premiums.
What does an underwriter do in life insurance?
The process of underwriting involves four basic functions: 1) selection of risks, 2) classification and rating, 3) policy forms, and 4) retention and reinsurance. By performing these four functions the underwriter increases the possibility of securing a safe and profitable distribution of risks.
What are the two functions of underwriting in life insurance?
Definition: Underwriting is one of the most important functions in the financial world wherein an individual or an institution undertakes the risk associated with a venture, an investment, or a loan in lieu of a premium. Underwriters are found in banking, insurance, and stock markets.
An insurance underwriter analyzes and assesses the risks in providing insurance to individuals and companies, and establishes the pricing of the insurance premium. Underwriters use software, data from actuaries, and statistical analysis in order to evaluate the risk of a future event that would require the insurance company to compensate an insured individual. For example, an underwriter would analyze the risk of a fire damaging an individual’s home and calculate the cost associated with ...