Insurance Underwriter

AAA

DEFINITION of 'Insurance Underwriter'

A financial professional that evaluates the risks of insuring a particular person or asset and uses that information to set premium pricing for insurance policies. Insurance underwriters are employed by insurance companies to help price life insurance, health insurance, property/casualty insurance and homeowners insurance, among others.

Underwriters use computer programs and actuarial data to determine the likelihood and magnitude of a payout over the life of the policy. Higher-risk individuals and assets will have to pay more in premiums to receive the same level of protection as a (perceived) lower-risk person or asset.

INVESTOPEDIA EXPLAINS 'Insurance Underwriter'

Insurance underwriting is big business – just ask Warren Buffett, who for years has used insurance and reinsurance premiums to fund his investments at Berkshire Hathaway.

Insurance companies walk a tightrope between being too aggressive or too conservative in their underwriting duties. If they are too aggressive, greater-than-expected claims could cut into company earnings; if they are too conservative, they will be outpriced by the competition and lose business.

RELATED TERMS
  1. Ambulance Chaser

    In insurance, a derogatory term for lawyers and other service ...
  2. Title Binder

    A temporary form of real estate insurance coverage related to ...
  3. Ceding Company

    An insurance company that passes the part or all of its risks ...
  4. American Agency System

    A method of selling insurance policies in which independent insurance ...
  5. Invisible Hard Market

    A property/casualty insurance market phenomenon in which the ...
  6. Life Insurance

    A protection against the loss of income that would result if ...
Related Articles
  1. Insurance

    Can I Get Life Insurance?

  2. Home & Auto

    Insure Your Future With A Career As ...

  3. Insurance

    Is Insurance Underwriting Right For ...

  4. Options & Futures

    The Alphabet Soup Of Financial Certifications

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center