Property insurance underwriting involves workers aligned with a property insurance company evaluating the risk of selling property insurance to a particular person or company. Along with risk, property insurance underwriting also evaluates what to charge those who are accepted. Risk evaluation once was done by hand and through educated guesswork, but contemporary underwriters typically use computer software. To evaluate risk, the owner’s past and the area in which the property is situated are looked into to see if he or she can be given insurance without the property insurance company losing money.
Typically linked with casualty insurance, property insurance underwriting is split into several groups. There is homeowner’s insurance, automobile and marine insurance, to name a few. Many underwriters also focus on either personal insurance or commercial insurance, though some handle both. While each branch is different, the underwriter’s job remains relatively the same.
When someone seeks property insurance, he or she is asked for information such as driving records, address and other information that will help the underwriter. After obtaining this data, the underwriter must research to see if the client’s risk is low enough to allow the insurance company to cover him or her. In the past, property insurance underwriting would go through records and search for any felonies or problems associated with the person seeking insurance. Underwriting software has taken over looking through all this data and evaluating risk from the insurance seeker.
The underwriter now has to determine whether the person can be covered based on risk. Risk is typically governed by data specifically about the property, such as accidents at home for homeowner’s insurance or driving records for automobile, but other information is also looked at to see if the insurance seeker is involved in any dangerous or illegal activities. Property area if land and type of automobile if vehicle also are looked at, because insuring a house in an area prone to severe weather will be riskier than insuring a house where there are only light storms. If the underwriter decides the company can cover the person, a price for insurance is determined.
Property insurance underwriting determines the premium, or cost, of the insurance. Higher premiums are made for riskier clients and those with higher property values. Underwriting will also go over the information again if any accidents happen, or once or twice a year, and may adjust the premium accordingly.
Aside from evaluating risk and acting as a gatekeeper, property insurance underwriting is also supposed to get new customers. Property insurance firms want money, but not risky clients. The underwriter performs both of these duties by getting new clients, but only those who are not going to cost the company money.