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
Background information used in life and health insurance underwriting to ascertain the probability of hereditary disease. The purpose is to determine if the disease is of such a nature that ...
1890 law prohibiting monopolies and restraint of trade in interstate commerce. The Sherman Act was strengthened in 1914 with amendments known as the Clayton Act that added further ...
Coverage for direct or indirect property loss that can be analyzed under the following headings: Peril a particular peril may be included or excluded. For example, the Standard Fire Policy ...
Plan under which an employee authorizes his or her employer to deduct from each paycheck premiums due on an insurance plan. ...
Insurance company's total premium income plus investment income. ...
Protection for the assets of a business (including merchandise for sale, real property, money and securities) in the event of robbery, burglary, larceny, forgery, and embezzlement. Coverage ...
Provision of liability insurance that excludes coverage for dishonest acts of an insured. ...
Arrangement under which the insured pays a fixed premium to the insurance company in exchange for the total transfer of the risk to that company. ...
Extension of coverage available under the Standard Fire Policy. The standard policy only covers the perils of fire and lightning. The endorsement covers riot, riot attending a strike, civil ...
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