Here are 10 FAQs on general insurance underwriting in India:
1. What is general insurance underwriting?
General insurance underwriting is the process of evaluating a risk and deciding whether to accept the insurance application, determine coverage terms, and calculate the appropriate premium.
2. What factors do underwriters consider in general insurance?
Type of risk: Different risks for health, motor, home, or travel insurance.
Details of the insured: Age, health (for health insurance), driving record (for motor insurance), property location (for home insurance).
Sum insured: The amount of coverage requested.
Policy terms: Deductibles, coverage limits, exclusions.
3. What are the key principles of general insurance underwriting?
Utmost Good Faith: Both the applicant and insurer must disclose all relevant information.
Indemnity: The insured should be compensated for the actual loss, not profit from the insurance.
Risk Assessment: Thoroughly evaluating the likelihood and potential severity of a loss.
4. How do underwriters assess risk in health insurance?
Age of the applicant
Pre-existing medical conditions
Family medical history
Lifestyle habits (smoking, alcohol consumption)
Occupation
5. How do underwriters assess risk in motor insurance?
Vehicle type, age, and value
Driving history of the insured (accidents, traffic violations)
Location where the vehicle is primarily used
Purpose of use (personal vs. commercial)
6. What are common underwriting decisions?
Accept the risk: Offer standard coverage at calculated premium.
Accept with modifications: Offer coverage with exclusions or higher premiums.
Decline the risk: Deny insurance coverage altogether.
7. How is technology changing insurance underwriting?
Data analytics: Analysing large datasets for better risk prediction.
Predictive modelling: Using algorithms to identify high-risk individuals or areas.
Automation: Streamlining processes for faster underwriting decisions.
8. What is reinsurance and how does it relate to underwriting?
Reinsurance is where an insurance company transfers a portion of its risk to another insurance company (reinsurer). This helps insurers manage large risks and improve their financial stability, ultimately impacting underwriting decisions.
9. What are the regulations governing general insurance underwriting in India?
The Insurance Regulatory and Development Authority of India (IRDAI) sets guidelines and regulations for underwriting practices to ensure fair treatment of customers and protect the insurance market.
10. What are the ethical considerations in insurance underwriting?
Avoiding discrimination based on factors unrelated to risk
Ensuring transparency in underwriting decisions
Balancing risk assessment with social responsibility and access to insurance
