An underwriting process aims to understand the risks faced by an organisation and its management. It is undertaken by an insurer to help it decide whether coverage should be offered, and if so, on what terms. Best described as part art, part science, it is a process that is essential for establishing an insurance contract that benefits all parties involved.
In this article, we will explore the underwriting process within the context of the following coverages:
- Directors and officers liability insurance
- Employment practices liability insurance
- Management liability insurance
- D&O insurance for nonprofits
You may also find that similar concepts apply to a broad range of financial lines insurances, such as professional indemnity insurance, cyber insurance, and even crime insurance to a certain extent. Keep in mind, however, that each policy is strictly interpreted according to its own terms and conditions.
Contents
1 Underwriting process: A definition
2 The role of underwriting in a policy’s lifecycle
3 What are the common underwriting considerations?
4 Assessing an organisation’s risk control environment
5 How are the terms of a policy crafted?
6 How are optional coverages considered?
7 Accounting for recent claims and circumstances
8 How is a premium calculated?
9 Underwriting process: An example
10 Conclusion
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