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Insurance underwriting is a process where an insurance company evaluates the risk to an investment by considering the risk factors associated with that investment. If the evaluation is favorable, then the insurer will issue an insurance policy to that business. Insurance underwriting services offered by some large financial organizations, like banks, insurance firms, and investment homes, require them to accept the entire financial risk for insured liability from those policies and ensure payment if there is damage or loss. Plentii recognizes that in this way, the risk of loss is shared between the insurer and the customer.
Insurance underwriting is a major process used by many insurance firms today. However, it can be confusing, so it pays to understand what insurance underwriting is before you get into it. Basically, insurance underwriting occurs when an insurance company underwrites a policy, which is known as an "advance," against an investment for the benefit of the insured. It is basically the same as life insurance. The difference lies in how the insurance underwriter compensates the client for the risk factor.
Insurance underwriting is a significant function of the insurance department of an institution and is done primarily through a Life Insurance Division (LID) department. An Insurance Underwriter is responsible for evaluating statistical data on mortality and morbidity and issuing life insurance policies. The entire process involves reviewing and interpreting statistical data relevant to public health, safety, and individuals' economic security.
In addition, the Underwriter plays an important role in formulating policy guidelines and performing other functions that are necessary for the proper administration of life insurance policies. This includes advising the management about their interactions with insurance carriers, providing guidelines for collecting premiums and death benefits, evaluating the costs and benefits of all life insurance forms, communicating with the public regarding life insurance, and managing the policies and the underwriting process.
In addition to the responsibilities that the Insurance Underwriter has to the companies that underwrite the policies, they also have a responsibility to protect the public from impaired quality of life and to administer programs to promote better medical practices and outcomes. This is accomplished by establishing the policies that provide the necessary coverage, which will help the public meet its healthcare needs. The methods of collection of premium payments, and how they are used by the Insurance Underwriter in administering the life insurance program, are also factors that must be considered in developing the programs that will achieve their goals. The insurance underwriting process is typically divided into three primary steps, beginning with establishing the guidelines and coverage requirements, followed by the development of the premium rates, and finally, the establishment of the claim processing procedures necessary to process the claims.
Our agents here at Plentii understand that the Insurance Underwriter is also responsible for establishing guidelines that define the minimum amount of risk required for a person to obtain insurance coverage. The minimum risk level requirements for individual consumers will vary, depending on several factors, including medical history, age, whether or not the consumer is a smoker, and whether or not a consumer is overweight. The Underwriter might also establish a minimum level of risk for corporations, including information technology and pharmaceutical concerns. The Underwriter is also responsible for establishing maximum benefit levels, a concept designed to ensure the greatest possible return on investment from the premiums paid.
Another responsibility of the Insurance Underwriter is to establish maximum benefit scenarios, which are designed to accommodate the broadest range of risk imaginable. The process of underwriting determines which risks will be included in the insurance policy and will determine the amount of coverage and premiums that will be required.
The Underwriter must be aware of the anticipated benefits and costs from all risk factors, including mortality and morbidity. They must make decisions about the inclusion, or exclusion, of risk factors from the insurance policy that are deemed necessary for meeting the policy's objectives and the method by which these objectives are attained. All risks must be balanced with respect to the public's need to obtain the required insurance policy coverage.
Insurance underwriting is a continuous process rather than a one-time action. The process remains dynamic, as insurance needs change along with the needs of the general public. To meet these evolving needs, an ever-changing list of risk factors must be compiled and monitored. In order to successfully provide for the ever-changing needs of the insured, insurance underwriting companies must continuously assess and reevaluate the risks posed by various situations.
Insurance underwriters are charged with a tremendous responsibility to ensure that the policies they issue are providing maximum protection for the insured. The constant changes in insurance industry regulations and the insured's risks require that Insurance Underwriters can reevaluate their underwriting methodology on an ongoing basis.
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Insurance underwriting is the primary process involved in providing coverage for the thousands of different items and situations that may occur. Many people fail to realize that the insurance industry is far more complex than most people imagine. Plentii understands; contact an agent today to see what coverage is available to you. Insurance underwriting is not a "one size fits all" industry. Many different factors need to be considered, and insurance companies continue to evolve their underwriting methods to provide you with the latest coverage available.