Insurance underwriting determines eligibility and assigns a monetary value to insurance. A computer is used to analyze data and assess risk, and underwriters work in categories such as property/accident, life, health, or mortgage. No formal training is required, but credentials and continuing education are beneficial.
Insurance underwriting is the process of determining whether a potential customer is eligible to be insured for a specific reason and, if so, assigning a monetary value to the insurance. There is a wide spectrum of possibilities for one’s insurance, and it is up to the insurer to use the many tools at their disposal to determine the right cost for their business, as well as the terms of the insurance contract. Examples of the risks an underwriter might assess are auto, property, disease, sports, and life, each of which can vary greatly depending on many factors.
The main tool used in insurance underwriting is a computer, which can be used in a number of ways to try to ensure that a policy does not result in loss. One of the ways to do this is to look at large amounts of data about past policies and compare them to information about the current insurance applicant. If a risk for a customer is particularly high, for example, a computer program will determine a premium to apply or simply deny the customer a policy if it is too risky. Computers are also used to access many online databases that can carry information about a specific client’s history or about past records of similar cases, as well as success rates for these insurance policies. Research is a vital part of underwriting insurance simply because there are so many factors involved.
While there are many categories and subcategories of insurance, an insurance underwriter generally works under one of four categories: property/accident, life, health, or mortgage. Various varieties of these types of insurance can also cover group policies, which can make it difficult to underwrite because more people must be insured. One risky person in a group can increase the value of the entire policy, and it is often up to the underwriter to interview everyone involved in the potential policy. An insurance underwriter is usually responsible for knowing all the different categories of insurance, especially when his employer offers general policies that may guarantee the customer a “package” of risks, not just one.
Insurance underwriting does not require any formal training, although most insurance companies require that a prospective underwriter possess credentials such as a bachelor’s degree or several years of prior underwriting experience. The inexperienced underwriter will require training from someone with experience. Even an experienced insurance underwriter starting at a new company will need training, due to specialized software and techniques that vary between companies. As there are constant technological advances, insurance underwriting often requires continuing education and up-to-date knowledge of the field. An underwriter can also obtain a state license and use his knowledge to work as an agent or broker who sells insurance policies.
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