What is Underwriting and How Does The Process Work?

Summary

The video explains underwriting as an insurer’s process for assessing an applicant’s risk before deciding whether—and on what terms—to provide cover. It focuses on personal risk insurance, such as life, income protection, trauma, and health insurance.

Underwriting process

1. Get a quote and apply. After choosing a quote, the applicant completes an application with information about their health and circumstances.
2. The insurer reviews the application. Depending on the answers, the insurer may request medical records from the applicant’s doctor. The applicant’s signed application authorizes this. Reviewing records can take time and may uncover medical history the applicant has forgotten or considered minor.
3. The insurer assesses the risk and sets terms. Possible outcomes include:
   • Acceptance with no exclusions
   • Acceptance with specific health-related exclusions
   • Acceptance with a premium loading
   • Declined cover
4. An advisor supports negotiation and explanation. An advisor or broker can seek to narrow or remove exclusions, request a review after a period such as one year, or try to reduce or remove a loading. They can also explain the insurer’s offer to the client.

Business and operational takeaways

• Risk assessment depends on complete information. Medical-record checks help verify and clarify the application; they are not simply intended to catch applicants lying.
• Terms can be tailored to risk. Exclusions and premium loadings allow an insurer to adjust coverage rather than make only a simple accept-or-decline decision.
• Intermediaries add value through advocacy. Advisors can negotiate terms on a client’s behalf and help them understand the final offer.
• Historical context: The term underwriting is traced to 17th-century shipping merchants who assessed a voyage’s risks, agreed to share the exposure, and signed beneath the contract.

Metrics and timelines

No business performance metrics, underwriting turnaround targets, or quantified timelines are provided. The only example of a review period is an advisor seeking a one-year review of an exclusion.

Presenter/source: Unnamed presenter from Apex Advice.