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
Total premiums generated from all policies written by an insurance company within a given period of time. ...
Right of an insured to make additional purchases of life insurance without having to take a physical examination or show other evidence of insurability. Additions can be bought at stated ...
Group of insurers or re insurers involved in joint underwriting. Members typically take predetermined shares of premiums, losses, expenses, and profits. Syndicates, more common in ...
Sum total of the annual effective rate of return earned by an owner of a bond if that bond is held until its maturity date. This effective return includes the current income generated by ...
Coverage that pays a fixed dollar amount of interest at regular intervals. ...
Expectation of illness or injury. The probability of such occurrence is shown by a morbidity table, which is important in determining the premiums for health insurance policies. ...
Land and attached structures. Interest in real estate can be protected through various insurance policies. ...
Employee benefit program that emphasizes the pursuit of a lifestyle that minimizes the occurrence of sickness through an organized program of preventive medicine. Such a program includes ...
Coverage against foreign country expropriation underwritten by the overseas private investment corporation (OPIC) for U.S.-owned companies investing in given developing countries. ...
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