Underwriting

Just the Facts

An underwriter's job is an exacting process that only in recent decades with the aid of complicated computer models has become somewhat easier. It is the job of an underwriter to evaluate the risk of writing a certain plan, and then, based on that risk decide whether or not to offer a plan and if so, how much the premium should be for. In order to make these decisions, Underwriters are in possession of and use complicated tables and actuarial information that gives them insight to many hidden variables that you probably don't consider when thinking about buying protection. If an underwriter is too conservative or too liberal in their plan recommendations, they are likely to cost their company money (which eventually will cost the underwriter their job).

Some Basic Factors to Consider

When it comes to underwriting insurance for homes, underwriters use complex computer models that literally take into account hundreds of different factors to determine how much of a risk the policy presents to the provider. Slight changes in any of these factors can mean a significant difference in the overall policy rating. Being aware of all of these factors - most of which are beyond the control of the policyholder is unnecessary. A few of them would be:

• Prior Losses - If the person requesting the plan has had any prior claims in the last ten years or so, that is considered an increased risk to the company.
• Home Location - Face it, some neighborhoods are more apt to experience a robbery than others, in other parts of the country, wildfires may be fairly common. Though flood insurance is not typically included in most policies, if it is requested, the rate of flood for that area will be taken into consideration as well.
• Age of Home - The older a home is, the more likely it is to be exempt from certain modern building standards, and have had time to experience loss-causing factors due to wear and tear.
• Size of the Requested Policy - The more that a potential loss will cost a company, the more an underwriter will have to consider very strongly the increased financial risk to their employer.
• Weather Patterns - Weather conditions are responsible for nearly half of all house insurance claims around the country. If you live in an area frequented by heavy snows, tornados or the occasional hurricane, you can expect those factors to consider into the price and premiums of your plan.

Underwriting is an extensive process, but one which is being accomplished much more quickly in this day and age. Typically, once your account has gone through underwriting, negotiating a different price is next to impossible, unless you can come up with some mitigating factors or other information not included in your original application that the insurer will look favorably upon.