What Insurance Underwriters Do?

Answer 1

Insurance is a worldwide, multi-billion dollar industry. Some of the largest companies in the world are insurance companies. Insurance is a form of risk management; it is used to hedge against largely contingent risks, which are losses that cannot be predicted. The company selling and providing the insurance is known as the insurer, while the customer buying the insurance is known as the insured or the policyholder. There are many people involved in the process of providing insurance, but one of the most important positions is the insurance underwriter.

The underwriter determines whether the insurance will be provided, and if so, under what terms. The underwriters are thus the gateway the applicant has to pass through. Underwriters calculate the actual risk of loss to the insurance company from policyholders, establish which applicant will receive a policy, calculate the appropriate premium, and write the actual policies that cover this risk. Underwriters are responsible for the entire core of the insurance business, which is calculating risk and writing policies. Underwriting is the process of verification and of due diligence when applying for an insurance policy.

Underwriters use complex software programs and computer systems to precisely calculate the risk for each type of loss, and writes the policy according to those calculations. Underwriters consider many factors about the applicant when making their decision, such as their age, sex, family history, current lifestyle, health and financial situation. Since all of these factors play a role in risk calculations, they must be assessed by the underwriter when performing said calculations.

Underwriters are the backbone of insurance companies because they provide the certainty needed to issue a policy. Due to the automated nature of many risk calculation programs, calculating risk has become much easier over the years as computational power has advanced considerably. Underwriters work in office settings, and they typically command high salaries. Underwriters play an essential role to the insurance business, which makes them in high demand during all economic conditions.