From your side, you enter in all of your personal information, and a little while later, you receive a premium amount. The cost of your premium doesn’t come from a random number generator. It is thoroughly calculated using specific factors. There’s a lot that goes into the final rate. This job belongs to the company’s underwriter.
Underwriting is a very complex task, and underwriters are trained professionals.
Say you’re looking to purchase auto insurance. The information gathered when you start your quote helps the underwriter determine how the risk might affect the insurance company. If you live in a city full of traffic, with a high crime rate, and you have excessive tickets on your record, the underwriter has the ability to deny coverage altogether. Alternatively, depending on other factors, you could receive discounts.
Basically, their job is analyzing risks. Depending on the risks, the underwriter decides whom they’ll insure, and what specific coverages the company is willing to insure that person for. Finally, they decide on a premium amount. The underwriter decides how likely it is that they’ll have to pay out on a claim. When an insurance company decides to insure you, they are now financially responsible for those aspects of your life. Underwriters are the professionals who decide whether to take you on as a risk or not.
Their job includes these tasks:
- Risk analysis using your information
- Decides whether your risk is acceptable or not
- Determines which coverages they’ll provide to you
- Gives you advice about reducing your possible risks