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Insurance underwriter: What it is, duties in Insurance contract

Insurance underwriter is a professional who accesses and classifies risks on behalf of an insurance company, the underwriter through his assessment and classification of risk on a potential customer

Who is looking to buy an insurance policy determines if the insurance will offer such policy or decline based on the availability of risk appetite of the Insurance company.

Points to note

  • The underwriter evaluates and accesses risk for an insurance company
  • He makes key decisions involving offering a policy to a potential customer
  • An underwriter is a professional whose judgment of fact is been relied on by the insurance company
  • Insurance underwriter establish pricing, charge premiums in return with a promise to indemnify the insured in event of unforeseen/potential loss, casualty or damage.

How insurance underwriter works

The underwriter access and evaluates risks associated with a potential customer, he then determines the extent or price to offer for an insurance policy the customer is looking to buy.

The customer is expected to accept such price and pay premiums on monthly schedule to make the contract binding.

Wherein the customer will be indemnified from the premium being paid overtime per adventure he run into loss or damages associated with the contract being purchased.

The underwriter prices the insurance package in such arrangement that the company can make some profit while it stays competitive in the market since the company is not a charity organization.

Where the underwriter envisage/from presentation of fact understands that a potential buyer is a high risk customer that may cost the company a lot in compensation in event of possible loss, such customer may be denied an offer.

Customers with presumed high health risk are most likely to fall under this category in a potential health/life insurance.

A customer who has a long age record of smoking is expected to be charged/priced high enough to cover possible risks associated with his health than another who does not have a history in smoking.

In this preference, depending on the availability of fact and assessment, the insurance underwriter may from his own judgment decide that the company may run into loss by offering such customer a policy.

Eventually, such customer may be denied an offer of insurance policy.


If a prospective customer Mr. Gray is looking to buy a life insurance policy with Skye insurance, on assessment and evaluation by the company’s underwriter it was discovered that Mr. Gray is a chain smoker who has a history in smoking for over 15 years.

The underwriter in his assessment of material facts as presented by the customer should have accessed that Mr. Gray as a high risk customer.

In this case a customer with such a long history of smoking or any other terminal illness is likely to die untimely, offering a life insurance policy to such customer is not within the best interest of the company.

Most often, customers in this category are denied offer, where offer is considered it’s usually expensive such that the premium contribution could cater for the indemnity in event of death.

Duties of insurance underwriter

  • An underwriter examines insurance proposal
  • Access risks having collecting background information
  • With the aid of special computer programs, the underwriter analyze statistical data
  • The underwriter writes quotes and negotiates terms with insurance brokers and clients
  • The underwriter having assessed and evaluates risks, he determines premiums payable by the customer on monthly basis
  • The wordings of the policies are drafted, compiled and written by the insurance underwriter.

Insurance underwriting process

The process of underwriting involves assessing factors that determine a customer’s risk profile in prospective. However depend on the type of insurance policy the potential customer is looking to buy.

Some factors that determine customer’s risk profile are

  • Type of business
  • Age of the business in prospect
  • Financial status of the business like sales and assets, size, etc.
  • Credit score, bankruptcy, etc.
  • State or condition of the property to be insured
  • Existing insurance claims
  • Safety and security systems in place in any
  • Availability of loss-prevention mechanism

Having understood these factors the underwriter determines if your company has risk factors capable of hampering your ability to buy an insurance policy.

Insurance underwriter vs Broker vs Agent

The underwriter creates statistical models of future losses, his effort creates a template that determines to whom the insurer will offer a coverage.

However, insurance brokers and agents are field representative of the insurance business,

  • They help the customers determine the type of insurance they qualify for
  • They help the customer complete an insurance application form
  • They help the underwriters to interpret information about the insurance company they are looking to buy policy from
  • They negotiate with the underwriters on your behalf
  • They provide quality education about your choice of insurance coverage.

Read more about Insurance broker and agents in a contract.


An insurance underwriter writes the company insurance policies, determines who is being offered a cover by assessing and evaluating potential risks associated with your business.

He determines the price and premium payable upon convinced assessment of your class of risk, however he sets the price to ensure the insurance company remains competitive in market pricing.

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