Underwriting Risk

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Dictionary Says

Definition of 'Underwriting Risk'

The risk of loss borne by an underwriter. Underwriting risk generally refers to the risk of loss on underwriting activity in the insurance or securities industries.

In insurance, underwriting risk may either arise from an inaccurate assessment of the risks entailed in writing an insurance policy, or from factors wholly out of the underwriter's control. As a result, the policy may cost the insurer much more than it has earned in premiums.

In the securities industry, underwriting risk usually arises if an underwriter such as a investment bank overestimates demand for an underwritten issue or if market conditions change suddenly. In such cases, the underwriter may be forced to hold part of the issue in its inventory or sell it at a loss.

Investopedia Says

Investopedia explains 'Underwriting Risk'

Underwriting risk is an integral part of business for insurers and investment banks. While it is impossible to eliminate it entirely, underwriting risk is a key focus for risk mitigation efforts. The long-term profitability of an underwriter is directly proportional to its mitigation of underwriting risk.
Search results for

'Underwriting Risk'

  • Investing In Health Insurance Companies

    http://www.investopedia.com/articles/stocks/09/investing-in-health-insurance.asp
    ... These products require that the private companies take responsibility for the
    underwriting risk; the insurer only acts as an administrator for the plan by ...

  • Is Insurance Underwriting Right For You?

    http://www.investopedia.com/articles/financialcareers/08/insurance-underwriting.asp
    ... is a vital part of underwriting. Computer software systems are used to analyze and
    rate insurance applications, make recommendations based on risk and adjust ...

  • Brokerage Functions: Underwriting And Agency Roles

    http://www.investopedia.com/articles/basics/04/042304.asp
    ... The rewards for taking this risk, however, are often huge: the underwriting firm
    receives a profit from the difference between the buying and selling prices ...

  • How The Republican Wins Are Benefiting HMOs

    http://stocks.investopedia.com/stock-analysis/2010/How-The-Republican-Wins-Are-Benefiting-HMOs-UNH-AET-WLP-HUM1110.aspx
    ... and healthy. However, unknowns about the current pool of uninsured and
    their potential usage patterns create underwriting risk. ...

  • What's The Next Bubble? - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/0811/Whats-The-Next-Bubble.aspx
    ... Declining values make financing hard to come by as lenders have sought
    reliable metrics that limit their underwriting risk. The ...

  • Intro To Insurance: Fundamentals Of Insurance | Investopedia

    http://www.investopedia.com/university/insurance/insurance2.asp
    ... how much the loss could be and then using this information to determine how much
    you should pay to insure against the risk. The underwriting process will ...

  • Can I Get Life Insurance?

    http://www.investopedia.com/articles/pf/08/get-life-insurance.asp
    ... An Impaired-Risk Specialist Can Help An impaired-risk specialist is an insurance
    broker who is familiar with life insurance underwriting in general and the ...

  • Why is my insurance premium so high/low?

    http://www.investopedia.com/ask/answers/09/insurance-premium-high-low.asp
    ... Upon completion of the underwriting process, the insurer uses a rating table to
    match the amount of assumed risk with the premium required to implement coverage ...

  • The History Of Insurance

    http://www.investopedia.com/articles/08/history-of-insurance.asp
    ... were taking responsibility for (hence, underwriting). In this way, a single voyage
    would have multiple underwriters, who would try to spread their risk as well ...

  • What is the difference between risk tolerance and risk capacity?

    http://www.investopedia.com/ask/answers/08/difference-between-risk-tolerance-and-risk-capacity.asp
    ... For related reading, be sure to check out Risk Tolerance Only ... the financial industry,
    including workers' compensation insurance underwriting, financial planning ...

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