Page 73 - Ebook health insurance IC27

Sashi Publications

Important Points to Remember

What is underwriting?

Underwriting is the process of determining the level of
risk presented by the proposer and deciding whether
to accept the same and if so at what terms and at what
price.

Underwriting is essential in all forms of insurance.
Understanding the concept of risk sharing or pooling makes
it easier to understand the role of underwriting and text
classification.

Underwriting helps insurer to

 Cover the risk properly
 Offer competitive price
 Cover suitable margin to pay claims and expenses
 Compliance with regulatory requirements
 Reject Uninsurable risks
 Prevent Moral hazard
 Earn Reasonable profit
 Apply suitable deductibles

The importance of underwriting

 For insurers: underwriting helps the insurer to stay competitive, solvent and
profitable.

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