When you are buying an insurance policy, you get to hear the word ‘Underwriter’. Underwriter is an insurance person who does underwriting. Many a times an insurer who owns a policy from any insurance company will not be aware that at some point their application passed through an underwriter’s hand. Insurance company is run at high risk. It protects individuals from financial loss occurring due to car accidents, home burglary, property damage, illness and others. Getting involved in such big business, underwriting is one of the most important aspect of insurance process. So, it is necessary to know what an underwriter does and why is it salient, before you shop for an insurance policy.
Underwriting is a process to ensure that the insurance companies charge the right amount of insurance coverage. An underwriter decides if insurance is to be provided, if so, then under what terms. It happens pretty much behind the scene in the company, they are also involved in choosing who the insurance company will not insure. They are employed by the insurance companies. If the company charges too little for the coverage, they will run out of money to pay for the claims but if they charge too much, they will loose customers to competitors. Here an underwriter will provide a helping hand to insurance companies in order to decide accurate prices. He has a vital role in detecting and preventing fraud. They use sophisticated computer software and actual data provided by the customers to evaluate the risk involved, a likelihood and magnitude of payout in insuring a customer over the life of policy.
As underwriting plays a major role in obtaining an insurance policy to protect you and your needs, you need to understand how to handle underwriting process when applying for an insurance policy. Do not lie or provide any wrong information on an insurance application. Carefully think before you provide any details and supply the required information to the company’s underwriting department else it can lead you to be prosecuted for fraud. Once the form is submitted, an underwriter will contact you to clarify or if in need of more information, respond to them for fast process of your application. Finally, an underwriter will evaluate your risk and will place you on one of the different risk zones. Based on which your premium will be determined. Please note that your insurance policy can be declined based on underwriter’s risk evaluation.