How to Underwrite Insurance


The process of underwriting an insurance policy determines whether a risk is acceptable and how much premium should be charged to an individual customer. Underwriting helps an insurer balance risks and maintain finances in order to pay out claims as they occur. Learning about the underwriting process will give you a better understanding of how your insurance is priced.

Things You'll Need

  • Insurance application(s)
  • Motor Vehicle Reports (MVRS)
  • Pictures of property
  • Credit reports
  • Financial reports

Underwriting Insurance

Collect all the necessary pieces of information. Depending on the type of insurance requested, underwriters need an application, pictures of property (such as cars or buildings), credit history, loss histories from previous policies, financial statements and any related company website addresses.

Review the information to learn about the applicant and the items to be insured. Look at company websites for commercial applicants, and conduct an Internet search to find news articles or other mentions of the applicant.

Evaluate the risks involved with an applicant based upon predetermined underwriting guidelines and state and federal laws. For simpler risks, such as those related to homeowner's or auto insurance, underwriting is an automated process that evaluates information based on preloaded guidelines. More complicated and costly risks, such as health and commercial coverages, require human interaction to determine the outcome of an application.

Choose whether to accept, reject or add conditions to an applicant's insurance policy. If all guidelines are met, policies are issued without change. If an applicant does not meet underwriting standards, the underwriter can choose to reject the application or to amend coverage by altering the amount of insurance offered, adding exclusions and requiring an applicant to make changes before insurance will be offered.

Maintain Continuing Education requirements and stay informed about changes within the insurance industry. Keep apprised of changes in federal and state insurance guidelines and adjust underwriting procedures as needed.

Tips & Warnings

  • Agents typically gather all the underwriting information. Missing items can then be requested later, as needed. Financial reports and ratings are normally needed only for commercial insurance risks.
  • If an applicant refuses to comply with underwriting conditions or fails to divulge requested information, coverage can be denied or canceled.

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