Steps in the Underwriting Process
Underwriter
An insurer employee who evaluates applicants for insurance, selects those that are acceptable to the insurer, prices coverage, and determines policy terms and conditions
Hazard
A condition that increases the frequency or severity of a loss
Counteroffer
A proposal an offeree makes to an offeror that varies in some material way from the original offer, resulting in rejection of the original offer and constituting a new offer
Treaty reinsurance
A reinsurance agreement that covers an entire class or portfolio of loss exposures and provides that the primary insurer's individual loss exposures that fall within the treaty are automatically reinsured
Rating plan
A set of directions that specify criteria of the exposure base, the exposure unit, and rate per exposure unit to determine premiums for a particular line of insurance
Premium audit
Methodical examination of a policyholder's operations, records, and books of account to determine the actual exposure units and premium for insurance coverages already provided
Information efficiency
The balance that underwriters must maintain between the hazards presented by the account and the information needed to underwrite it
Mix of business
The distribution of individual policies that compose the book of business of a producer, territory, state, or region among the various lines and classifications
Loss costs
The portion of the rate that covers projected claim payments and loss adjusting expenses
Underwriting submission
Underwriting information for an initial application, or a substantive policy midterm or renewal change