Risk Selection
Methods by which a home office underwriter chooses applicants that an insurer will accept. The underwriter's job is to spread the costs equitably among members of the group to be insured. Therefore, the underwriter must determine which are normal risks, or standard risks, to be charged the standard rate; which are substandard risks, to be charged a higher rate; and which are preferred risks, to receive a discount. This process is made more difficult by SELF-SELECTION and ADVERSE SELECTION. The underwriter must screen applicants who are looking for insurance, specifically because they have a greater-than-normal chance of loss, and set the correct PREMIUM rate for them.
Popular Insurance Terms
Replacement car or additional car as used in the personal automobile policy. ...
In workers compensation insurance policies and several business property and liability policies, review of the payroll of a business firm in order to determine the premium for coverage. ...
Minimum of care owed by one party for the physical safety of another. Liability suits are brought because of negligent acts and omissions resulting from failures to exercise due care. ...
To accept by a reinsurer, part or all of a risk transferred to it by a primary insurer or another reinsurer. ...
Threatening act, physical and/or verbal, which causes a person to reasonably fear for life or safety. For example, if a boxing champion said he was going to hit someone, this would probably ...
Maximum amount of insurance that an insurance company will issue on a particular risk exposure. This limit is used by the insurance company to avoid having to pay for a loss on the exposure ...
Insurance for owners and operators of private, municipal, or commercial airports, as well as fixed-base operators, against claims resulting from injuries to members of the general public or ...
Insurance that covers each and every loss except for those specifically excluded. If the insurance company does not specifically exclude a particular loss, it is automatically covered. ...
Type of excess of loss reinsurance in which the insurance company (cedent) receives payments from its re-insurer in a specific pattern of payments. ...
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