Underwriting in insurance. What is it and what does sea transportation have to do with it
Insurance underwriting is the process of analyzing risks and deciding on the appropriateness of insuring the activities of a particular applicant.
An underwriter is called an underwriter.
What about maritime transport?
The history of underwriting goes back to the 17th century and the insurance of shipowners. The famous London insurer Lloyd’s began to guarantee the payment of compensation to ship owners in the event of a shipwreck, loss of cargo, or even crew. In this way, he assumed some of the risks in exchange for a premium. The sailors who paid the bonus literally wrote their names under the text describing the conditions that Lloyd’s took on. Hence, probably, the origin of the term “underwriting” (literally, underwriting is translated as “signing under”).
Still not completely clear what the underwriter does?
Let’s look at simple examples: Imagine yourself as the head of an insurance company. Three drivers approached you for insurance.
- Vasily: he has been driving recently, but has already become the culprit of several accidents. Yesterday I bought a new sports coupe with a powerful engine.
- Elena: not a single accident in 10 years. I bought a black SUV of a premium brand. Alas, popular with car thieves.
- Nikolai: a driver with 30 years of experience. Occasionally leaves for groceries in a compact hatchback.To whom would you approve insurance and under what conditions?In an insurance company, the underwriter will help answer these questions. The specialist analyzes data about drivers and their cars, calculates the probability of an insured event, and, using special algorithms, forms a fair policy price.