Question
In: Finance
Explain the underwriting policy and how it works in the insurance industry
Explain the underwriting policy and how it works in the insurance industry
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Expert Solution
Insurance underwriting is the process of evaluating a company's risk in insuring a home, car, driver, or an individual's health or life. It determines whether it would be profitable for an insurance company to take a chance on providing insurance coverage to an individual or business.
After determining the risk involved, the underwriter sets a price and establishes the insurance premium that will be charged in exchange for taking it on.
Underwriters are trained insurance professionals who understand risks and how to prevent them. They have specialized knowledge in risk assessment and use this knowledge to determine whether they'll insure something or someone, and at what cost
Insurance underwriters will usually review policies and risk information whenever a situation seems outside the norm. It doesn't necessarily mean that an underwriter will never look at your case again just because you've already contracted for a policy.
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