Glossary
Underwriting
Underwriting is the process an insurer uses to assess the risk of a life insurance application and decide whether to accept it and at what premium.
Underwriting explained
Before issuing a policy, the insurer looks at information about the person to be insured: age, health history, occupation, lifestyle habits such as smoking, and the amount of cover requested. This assessment is called underwriting.
The outcome can be acceptance at standard rates, acceptance with a higher premium (a loading), acceptance with certain conditions excluded, deferral until more information is available, or decline. For example, a smoker applying for term cover may be accepted with a loaded premium.
Simple products with low sums assured are often underwritten automatically using a short set of questions, while large or complex cases are reviewed by a human underwriter and may require medical reports.
Why it matters in life insurance
Good underwriting protects the insurer from taking on more risk than the premium reflects, and protects policyholders as a group from paying for unpriced risk. Ontech LifeI ERP applies configurable underwriting rules to applications and routes cases that fall outside those rules to an underwriter for review.