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Underwriting is the process of Selecting


insureds, Pricing coverage, Determining
insurance policy terms and conditions, and
then Monitoring the underwriting decisions
made.
An Underwriter is an insurance company
employee who evaluates applicants for
insurance, selects those that are acceptable
to the insurer, prices coverage and
determines policy terms and conditions.

UNDERWRITING
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Underwriting Activities
Selecting Insureds
Adverse Selection Considerations
Why
When
Capacity Considerations (Capacity Ratio)
Maintaining a spread of risk
(Different Coverage's, Different Geographical Areas)
Optimizing the use of available resources
Arranging Re-insurance
UNDERWRITING
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Underwriting Activities
Pricing Coverage
Premium Determination
Type of Rates
A) Class Rates (Manual Rates)
Merit Rating Plans
B) Individual Rates (Specific Rates)
(Commercial Property Insurance on Unique Structures)
Judgment Rates
(Ocean Marine Insurance)
UNDERWRITING
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Underwriting Activities

Determining Policy Terms and Conditions
Standard Forms (Insurance Advisory Organizations)

Monitoring Underwriting Decisions
Book of Business (Portfolio)
UNDERWRITING
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Underwriting Management

Participating in the overall management of the insurance
company
Arranging Reinsurance
Treaty Reinsurance
Facultative Reinsurance
Delegating underwriting authority
Underwriting Authority
Centralized
Decentralized
Making and enforcing underwriting guidelines
Monitoring the results of the underwriting guidelines
Underwriting Audits
UNDERWRITING
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The Underwriting Process
An underwriting decision must be made on every
new insurance application as well as on the
renewal policies. The Underwriting process
comprises the following steps: -
Gathering the necessary information
Making the Underwriting Decision
Implementing the Decision
Monitoring the decision
UNDERWRITING
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The Underwriting Process
Gathering the necessary information
Producers
Consumer investigation reports
Government records
Financial rating services
Inspection reports
Field marketing personnel
Claim files
Production records
Premium audit reports
Applicants or insureds records
UNDERWRITING
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The Underwriting Process
Making the Underwriting Decision
Analyzing Hazards
Physical hazards
Moral hazards
Morale (attitudinal) hazards
Legal hazards
Evaluating Underwriting Options
Accept the application without modification
Reject the application
Accept the application with modifications.
UNDERWRITING
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The Underwriting Process
Implementing the Underwriting Decision
Monitoring the Underwriting Decision
Monitoring of the Underwriting Decision involves: -
Reevaluation of decision in relation to claims The fact that an insured
has a serious loss or several losses is not necessarily an indication that
the underwriter made a bad decision.
Recommendation of additional loss control measures.
Where there is a request for coverage changes underwriter must
carefully evaluate each and every change and should make a decision.
Modifying coverage, rate, terms and conditions as and when need
arises.
Finally cancel or rejection of renewal depending upon the experience on
the particular account.
UNDERWRITING
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The Underwriting Process
Regulation of Underwriting Activity
Two important examples of the regulation of
underwriting activity are:
Prohibition of unfair discrimination
Restrictions on cancellation and non renewal
UNDERWRITING
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UNDERWRITING