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Underwriters work in several insurance categories, including health, life, auto and home. Their job is to review applications for insurance, analyze risks and decide whether the company will offer coverage. Underwriters must approve applications so that the insurance company can collect premiums. They must not approve too many high-risk applicants who may require large payouts, however, because the insurance company ultimately wants to make money.
Underwriters review applications for insurance and screen them based on the criteria of the insurance company. Applicants who do not meet the basic requirements are instantly denied insurance. For example, some auto insurance companies will not cover boats or motorcycles, so applicants seeking coverage for those are immediately denied coverage.
An insurance underwriter analyzes the risks associated with applications that meet the minimum criteria. For example, a home insurance underwriter considers whether a home or property is in a high-risk flood or earthquake zone. Health insurance underwriters consider medical risks such as a family history of cancer or heart disease, or an individual with a history of smoking. Underwriters may communicate with medical doctors, credit bureaus and other agencies to gather additional information as needed.
Underwriters use computer programs and software to help them determine an applicant's eligibility and risk factors. The underwriter must understand what facts to enter into the program. Based on the recommendations from the software and risk analysis, the underwriter decides whether to approve or reject an application. He may also choose to consider more information, such as credit history or additional medical records, if an applicant is on the border of being rejected or accepted.
Underwriters determine the coverage limits and premiums for approved policies. Higher-risk applicants pay higher premiums than those with lower risk. In addition, they may receive less coverage. Insurance underwriters write insurance policies explaining client coverage and premiums, while minimizing potential losses for the insurance company.