What does an underwriter do?

An underwriter plays a crucial role in the insurance industry by evaluating insurance applications and making decisions regarding the acceptance or rejection of coverage. This process involves assessing risks, collecting and analyzing information about the applicant, and determining if the applicant meets the necessary criteria for underwriting. By approving an application, the underwriter essentially agrees to assume the risk associated with insuring that individual or entity. Conversely, denying an application means that the underwriter has identified potential risks that are too high for the insurer to accept.

Setting insurance premiums, processing claims, and providing customer service are critical functions within the insurance operation, but they do not fall under the primary responsibilities of an underwriter. Premiums are often determined based on the underwriting decision and risk assessment but are typically set by actuaries or pricing specialists. Claims processing is handled by claims adjusters or examiners who investigate and manage the claims once they are opened. Customer service representatives focus on addressing policyholder inquiries and assistance.

Therefore, the underwriter's unique function in approving or denying applications is essential for maintaining the financial stability of the insurance company and ensuring that coverage is provided to suitable applicants.