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A beginner's guide to insurance underwriting

Insurance underwriting is the process of analysing and evaluating the risk profile of prospective clients and establishes the premium charge that matches the client’s risk appetite. If you want to apply for insurance underwriting jobs or you want to know what is the insurance underwriting process, read this article and get the relevant information.

Information required for underwriting

The underwriter requires the following information for his/her evaluation in order to come up with the premium chargeable. Personal information Information relating to identity varies with the profile of the client such as corporate business, individuals and commercial business. However, the basic information includes full name, physical address, occupation and age for individual underwriting.
Risk details This refers to the details of the risk to be insured such as property, motor vehicle, life, income and medical. If you are insuring your house, the home insurance agent would require information on the physical address of your home and its construction type as well as your occupation. Closely linked to risk details for businesses, is a requisition of a survey report by an underwriter who gives a detailed account of all the potential risk exposures.
Loss history It is important to disclose your loss history to the underwriter so that he/she can evaluate your riskiness. If your loss history is good, you will qualify for non-claim bonuses and discounts. However, if it is bad, the underwriter applies high rates. In most cases, underwriters require three years of claims history in order to correctly analyse your loss profile.

Utmost good faith

The process of underwriting in the insurance market relies on the principle of utmost good faith which stipulates that you should disclose all material facts surrounding any risk and cover is based on the information supplied. It is important to note that any deviation of risk from the information disclosed renders the insurance contact null and void.

What underwriters do

Prepare insurance quotations Underwriting insurance agencies like short-term underwriters and life insurance agents are responsible for analysing underwriting information and for preparing quotations based on the risk profile received.
Issue insurance policies Underwriters confirm insurance cover to clients and issue insurance contracts. They advise clients on the premiums applicable and issue them with insurance invoices or debit notes. Place reinsurance cover Insurance underwriters like the Lloyds insurance group are responsible for placing reinsurance cover such as facultative reinsurance with reinsurance companies and any world insurance company.

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