The underwriting process consists of several stages
At this level, the underwriting process consists of several stages:
• calculation of the size of the insurance premium;
• preparation and proposal to the relevant structures of the insurer under the reinsurance scheme.
However, the underwriting process
does not end with the conclusion or non-conclusion of the contract.
The underwriter participates in the support of the contract, monitoring the condition of the insurance
object and monitoring the implementation of the risk reduction action plan,
and in case of changes in the parameters of the risks accepted for insurance, recalculates the insurance rate and prepares amendments to the contract.
If the policyholder violates his obligations, the underwriter prepares an opinion on
termination of the contract or reduction of the insurance payment upon the occurrence of an insured event.
The purpose of underwriting
is to achieve a situation where all the risks offered for insurance are assessed and classified accordingly.
Based on the foregoing, it can be concluded that underwriting is a backbone process
in which the insurance portfolio is managed and,
ultimately, the economic security of the insurance company is ensured.
example,
for a certain type of vehicle insurance) are rejected automatically because an insurer does not see any
economic benefit or because an insurance company does not possess the necessary means of service
to conduct all operations that this type of insurance implies (for instance,
in the organizational structure of the insurance company, there is no a specific
the department that can provide a required quality of service: the department for considering drivers’ claims is absent);
5) account underwriting which is a form of underwriting when every prospective insured is
assessed in essence allowing for all pros and cons irrespective of the kind of entrepreneurial activity they perform;
financial underwriting
6) financial underwriting supposes that all financial statements and documents of an
organization are examined to assess the quality of management, identify reserves to improve the organization’s
performance and limit its exposure to various risks as well as to evaluate the organization’s
capability to pay insurance premiums and honor its financial commitments and guarantees.
It is also called management underwriting;
experimental underwriting
7) experimental underwriting is the practice of cautiously accepting particular risks for coverage, risks which,
under normal circumstances, the company would not insure against because of its insurance standards;
8) professional underwriting is a set of methods applied and actions
taken to assess insurance risk and its factors that characterize the insured in terms of their job,
and probability of accidents during their work so as to understand
whether it is possible to conclude the insurance contract and calculate insurance rates and premiums [2;3].
Underwriting as an insurance process is relatively simple. Most information about risk an underwriter gets from an applica-
tion. If any further details are needed, the underwriter addresses the applicant and receives the required data.
The underwriting function is often delegated to a third party different from the insurer,
for example, a travel insurance policy can be taken out by a travel agency or an airline.
The insured fills in a form and is immediately given a standard insurance policy.
