Underwriting Risk

Definition

  • A measure of how much risk of loss an underwriter takes on from underwriting activities. In addition to an underwriter's erroneous assessment of risk, in the insurance industry, underwriting risk can occur due to factors completely out of the underwriters control. With securities, underwriting risk usually arises from market instability, or overestimation of demand for a product.

Synonyms
financial risk, insurance risk, insurance loss risk

Related Terms and Acronyms

  • Insurance Cycle Definition,
    • A cycle of soft and hard market conditions observed in the insurance and underwriting industry.
  • Insurance Score Definition,
    • A score used by those in the insurance industry to determine how likely a claim will need to be paid out for an individual or entity.
  • Lloyd's of London Company,
    • A market for insurance and reinsurance based in London, England where Lloyd's members, underwriters and financial backers can spread and share risk.
  • Loss Control Definition,
    • The combined efforts undertaken by both the insurer and the insured to lower the risk, frequency and extent of potential losses.
  • Mortality and Expense Risk Charge Definition,
    • A charge sometimes applied to reimburse an insurer for the risks in a policy.
  • Premiums Written Definition,
    • A sum of the premiums from all the policies that a company has written in a given period of time.
  • Underwriting (UW) Acronym, Important,
    • The analysis of risk involved in making a mortgage loan to determine whether the risk is acceptable to the lender. Underwriting involves evaluating the property as outlined in the appraisal report, and also evaluating the borrower's ability and willingness to repay the loan.
    • Assessing individuals for eligibility and issuing and distributing a financial product such as insurance, equity capital or credit.
  • Underwriting Guide Definition,
    • The rules and guidelines an underwriter must follow while writing policies.
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