What is Insurance Underwriting?

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  • Written By: Phil Shepley
  • Edited By: Bronwyn Harris
  • Last Modified Date: 26 September 2019
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Insurance underwriting is the process of determining whether or not a prospective customer is eligible to be insured for a particular reason, and if he is, assigning a monetary value to the insurance. There is a broad spectrum of possibilities of what someone may be insured for, and it is up to the insurance underwriter to use many tools at their disposal to determine the right cost for their business, as well as the terms of the insurance agreement. Examples of the risks that an underwriter may assess are auto, property, illness, sports, and life, each of which can vary a great deal depending on many factors.

The main tool used in insurance underwriting is a computer, which can be used in many ways to attempt to ensure that a policy will not result in a loss. One of the ways this is done is by examining vast amounts of data about previous policies and comparing it to information about the current insurance applicant. If a risk for a client is particularly high, for instance, a computer program will determine a premium to be applied, or simply deny the customer a policy if it is too risky. Computers are also used to access many online databases that can carry information about a specific client’s history or about previous records of similar cases as well as success rates of those insurance policies. Research is a vital part of insurance underwriting, simply because there are so many factors involved.


While there are many categories and subcategories of insurance, an insurance underwriter will usually work under one of four categories: property/casualty, life, health, or mortgage. Several varieties of these types of insurance also can cover group policies, which can make underwriting difficult because more people are to be insured. One risky person in a group can raise the premium on the entire policy, and it is often up to the underwriter to interview all people involved in the potential policy. An insurance underwriter will often be responsible for knowing about all of the different categories of insurance, especially when their employer offers blanket policies that can insure a client for a "package" of risks rather than just one.

Insurance underwriting does not require any kind of formal training, although most insurance companies will require a prospective underwriter to have credentials such as a bachelor’s degree or several years of previous experience as an underwriter. The inexperienced underwriter will require training under someone with experience. Even an experienced insurance underwriter who is starting at a new company will require training, because of the specialized software and techniques that vary between companies. Since there are constant technological advances, insurance underwriting usually requires continuing education and updated knowledge of the field. An underwriter can also obtain a state license and use their knowledge to work as an agent or broker selling insurance policies.


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