What is the definition of Underwriting?

Underwriting refers to the process of examining the acceptability of an insurance risk, and then forming the decision of whether to accept or reject the risk, as well as how much insurance should be offered. If a risk is accepted, it also involves computing for the right premiums or providing a premium rating according to the risk presented.

The job of the underwriter is to "write" or obtain business for the insurance company, the type that will result in profit for the company. The underwriter aims to avoid issuing insurance policies for risks that are most likely to result in a loss for the company.

There is usually a set of underwriting rules that each insurance company prescribes. This is to standardize the underwriting process as well as to provide guidelines that will help the underwriter issue policies to the "optimal" risks.

• Insolvency
• Misstatement of Age or Sex Provision
• Modified Premium Policies
• Moral Hazard
• Comprehensive Coverage