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
U.S. Supreme Court case in 1868 in which the decision (since overruled) was that an insurance policy was not an instrument of commerce, and thus did not involve interstate commerce ...
Person, business, or organization specified as the insured (s) in a property or liability insurance policy. In some instances, the policy provides broader coverage to persons other than ...
Financial analysis method established by the national association of insurance commissioners (naic) to detect problems of property and casualty insurance companies and life and health ...
Periodic payments to an annuitant. ...
Acknowledgment by the policyowner that he or she has received the policy loan requested. ...
Coverage for bodily injury and property damage liability resulting from the ownership, use, and/or maintenance of an insured business's premises as well as operations by the business ...
Central fund into which employees contribute untaxed earnings to pay for the insurance premiums and uninsured medical costs. When the employee submits evidence of unreimbursed medical ...
Physical, moral, or financial circumstance of a life insurance applicant that sets him or her apart from a physically, morally, and financially sound standard applicant. The underwriting ...
Automatically extended reporting period of five years, during which claims may be made after a claims made basis liability coverage policy has expired, provided these claims are the result ...
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