Underwriters

Insurance underwriting

Underwriters may choose to decline a risk, provide a quotation with adjusted premiums, or apply policy exclusions. Adjusted premiums typically include a loading factor, which accounts for administrative costs, expected claims, and a margin for profit. Policy exclusions, on the other hand, limit the circumstances under which claims can be made. Depending on the type of insurance product (line of business), insurance companies use automated underwriting systems to encode these rules, and reduce the amount of manual work in processing quotations and policy issuance. This is especially the case for certain simpler life or personal lines (auto, homeowners) insurance. Some insurance companies, however, rely on agents to underwrite for them. This arrangement allows an insurer to operate in a market closer to its clients without having to establish a physical presence.