Insurance underwriting plays a key role in providing cheap auto insurance Austin texas The purpose of underwriting are inherent in its definition. Specifically, the purposes are: (1) to look for the acceptability of risks; (2) to find a distribution of business that will create a profit while providing an adequate spread of risks; (3) to maintain company solvency and (4) to meet the legal and moral requirements that rates be adequate, fair and non-discriminatory. Find auto insurance in Austin at www.txautoinsurancequotes.com.
A fifth underwriting purpose of special significance is to reduce adverse selection. Adverse selection refers to the action by persons who perceive a high probability of loss to try to buy insurance. Adverse selection, also known as selection from the insurer, may arise from confirmed premium structure or personal circumstances. For instance, as premiums increase, those who buy insurance are those who’re increasingly certain that they’ll require the insurance. On the other hand, those with physical and/or occupational impairments could be the ones who seek life and health coverage.
While risk selection is embodied within the underwriting function, its scope is somewhat broader. It involves alternative actions which may be taken on the original application, and it also involves monitoring the business. Monitoring pertains to (1) a follow-up on individual policies to make sure compliance with recommendations and to determine whether there has been a change in hazards; and (2) to examine the company on the books to determine if underwriting policy has been complied with and to detect changes in the type, volume and excellence of business which may require corrective action.
Amounts of Underwriting Authority
In certain lines of insurance, particularly group life, an important underwriting consideration is conformance using the statutes and the interpretive regulations of the several states. Where you can find statutory requirements, constraints are imposed upon the autonomous underwriting authority of an insurer. Underwriting authority is split into field underwriting and residential office underwriting.
Field Underwriting
In field underwriting, the risk selection function is performed by a local agent from the company. Once the term can be used, particularly in life insurance, the agent is called a life underwriter. Information concerning the applicants and also the risks they aim to transfer is obtained primarily in the application submitted for insurance. Inasmuch as the representative is often personally knowledgeable about the applicant, they might verify the facts and statements in the application, as well as provide additional pertinent details about the applicant’s moral quality and also the acceptability of risk.
