Underwriting
What is the main purpose of underwriting?
Develop and maintain a profitable book of business
What are the two types of underwriters
Field and corporate
evaluate application, develop alternative, select alternative, implement decision and lastly monitoring,
are all steps of what process?
Underwriting
What is the calculation of a policy premium
insurance rate multiplied by number of exposures unit to equal the unit price for coverage
The price per exposure unit for insurance coverage.
Rate
What do Underwriters do ?
evaluate risk
selects insureds
determine price
determine policy terms
creates a profitable business
Which group of underwriters would be best suited to help formulate an underwriting policy?
Corporate
What is the last step in the underwriting process?
Monitoring the underwriting decision
The unit price for insurance coverage is what
insurance rate
Insuring individuals with a high probability of loss at a cost lower than the insurer would normally charge for that risk because it wasn’t aware of the actual risk involved.
Adverse selection
Main activities of an underwriter
minimize adverse selection
ensure adequate policyholder surplus
enforce underwriting guidelines
Which group of underwriters would be best suited to select new and renewal accounts that meet the insurer’s underwriting guidelines?
Field
in some cases, the underwriter has no choice but to ________ the application during the underwriting alternative selection process.
reject
Measures of the loss exposures in insurance rating is
what is an exposure unit
A type of computer program that estimates losses from future potential catastrophic events.
Catastrophe model
Who else have levels of underwriting authority
What are agents and brokers
Who do field underwriters interact with
producers and applicants
Once evaluated, making any modifications, determining the premium, what is next?
Implementing the underwriting decision
Premium auditors help underwriters in these ways:
Ensuring accurate classification of exposures—
Comparing anticipated loss exposures with actual loss exposures
Identifying new exposures
Assessing an account’s desirability
Identifying physical, moral, and morale hazards
A group of policies with a common characteristic, such as territory or type of coverage, or all policies written by a particular insurer or agency.
Book of Business
Field inspectors, loss control measures and other examples of this___ give valuable information to underwriters
What is Risk Control Professionals
what are the other names for field and corporate underwriters
Line and Staff
An underwriter may recommend that a commercial applicant install sprinkler systems or fire alarms. This is an example of an underwriting implementation ____ control
risk
What do underwriters evaluate to determine the appropriate classification for a commercial operation?
Specific characteristics of the insured’s operation
The use of technological devices to transmit data via wireless communication and GPS tracking.
Telematics