Glossary

Underwriting is the process of determining whether to accept a risk and, if so, what amount of insurance the company will write on the acceptable risk and at what rate.

An underwriting agency is delegated the underwriting and policy writing authority by an insurer.

The underwriting capacity is the amount of risk assumption and/or retention ability of an insurer, or of the insurance industry as a whole, which is determined by the amount of surplus.

Underwriting cash flow is the net collected premiums (net of reinsurance premiums) less losses, loss adjustment expenses, and underwriting expenses paid.

All risks with a specified risk profile—for example, age, location, and occupation—are called an underwriting class.

Underwriting expense is the (1) cost incurred by an insurer when deciding whether to accept or decline a risk and (2) expenses deducted from insurance company revenues (including incurred losses and acquisition costs) to determine underwriting profit.

Underwriting guidelines establish the set of rules and requirements an insurer provides for its agents and underwriters.

The underwriting manager has the primarily responsible for achieving an underwriting profit at the local level.

An underwriting member is person elected to underwriting membership of Lloyd's of London and subscribing to Lloyd's policies issued in accordance with the United Kingdom Insurance Companies' Acts and complying with the regulations for membership as laid down by the Committee of Lloyd's.

The underwriting period is a limited time period at the beginning of a new policy when the insurer may gather the necessary information about an applicant and make a final decision on that applicant's acceptability.