Underwriter
What Is an Insurance Underwriter?
An insurance underwriter assesses the risk of insuring an individual or business to determine whether to approve their coverage application. If they accept the application, they set the policy terms and premium.
What Is an Underwriter’s Job?
An underwriter in insurance is mainly focused on:
- Assessing the risk an applicant poses to the insurance company (e.g., how likely they are to file a claim)
- Approving or denying coverage applications
- Determining the cost and terms of an insurance policy
- Writing the policy and adhering to legal standards
- Requesting more information from the applicant when necessary
Underwriters are one type of insurance professional you may interact with when buying a policy or filing a claim.
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| Role | Who They Work For | Core Responsibilities |
|---|---|---|
|
Agent/broker |
Agency/brokerage |
Advises you, finds coverage for your business, and explains options to you |
|
Underwriter |
Insurance carrier or managing general agent (MGA) |
Evaluates risk, decides terms, limits, and price |
|
Insurance carrier or third-party administrator (TPA) |
Investigates and manages claims |
What Do Underwriters Look At?
Insurance underwriters assess multiple factors to decide if your business qualifies for coverage and what your premium will be.
Business Operations
- What it includes: What you do, what services you offer, and/or what type of products you sell
- Why the underwriter cares: Different business activities carry different risk levels
Industry/Class
- What it includes: Your industry category (e.g., contractor, vendor, consultant)
- Why the underwriter cares: Some classes are riskier than others
Revenue & Payroll
- What it includes: Annual sales, number of employees, and/or use of subcontractors
- Why the underwriter cares: More activity and people can mean more risk exposure, and many policies have specific definitions of who is considered an employee
Location(s)
- What it includes: Where you operate and details about your physical location(s)
- Why the underwriter cares: Certain areas and properties have higher risk factors
Claims History
- What it includes: Past claims you’ve filed, including the frequency and severity of those claims
- Why the underwriter cares: Past behavior can hint at the likelihood of a future loss
Safety Practices
- What it includes: Training, procedures, contracts, waivers, and/or security
- Why the underwriter cares: Strong practices can reduce risk and justify better terms
Desired Limits
- What it includes: How much coverage you want
- Why the underwriter cares: Higher limits mean more potential payout, which equals more risk to the carrier
What Is an Underwriter vs. an Insurance Agent?
An underwriter determines whether an insurance company will cover an applicant and, if so, what the terms of that coverage will be. An insurance agent sells the policy and works on behalf of the policyholder, aiming to get them the best possible coverage and premium.
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| Question | Agent/Broker | Underwriter |
|---|---|---|
|
Who do they represent? |
Mainly you (the policyholder) |
|
|
What’s their main focus? |
Helping you find and understand coverage |
Protecting the carrier by evaluating and pricing risk |
|
Do you (the insured) talk to them directly? |
Often and regularly |
Rarely, and usually only through your agent |
|
What is their role in pricing? |
Gathers info, negotiates, and delivers quotes |
Sets or approves pricing and terms based on guidelines |
|
What is their role in the application process? |
Presents your account to the carrier |
Approves, modifies, or declines the risk |
TL;DR: Your agent is your guide, while the underwriter is the gatekeeper for the carrier’s risk.
How Can I Make Underwriting Easier for My Business?
An easier underwriting process = faster coverage. Here are some ways you can do your underwriter a favor:
- Be accurate and honest on applications: Leaving things out can cause problems later, especially if you ever have to file a claim
- Keep robust records: Contracts, safety policies, training logs, and incident reports show you take risk seriously
- Explain unusual operations clearly: Don’t assume the underwriter knows your niche; a simple explanation can help
- Share improvements: New safety measures, equipment upgrades, or process changes can mean better terms or lower premiums
- Respond quickly to questions: The faster you answer underwriting questions, the faster your quote or renewal can be finalized
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