Underwriting
Underwriting is the process by which an insurer assesses the risk of insuring a person or asset and decides whether to offer cover, and on what terms and at what premium. An underwriter evaluates factors such as age, health, claims history, occupation, location, and the value of the item being insured. Risks assessed as high may be declined, charged a higher premium, or accepted subject to exclusions.
Key underwriting factors
Risk profile
Age, health status, occupation, lifestyle, and past claims history are the primary inputs. For motor, driving record and annual mileage. For property, construction type, location, and security measures.
Sum insured
The higher the potential maximum payout, the more carefully the risk is underwritten. High-value homes and specialised assets often require individual (bespoke) underwriting rather than automated pricing.
Moral hazard
Underwriters consider whether the applicant's behaviour may change once insured. Prior fraud, non-disclosure, or a pattern of frequent claims are flags that can lead to loading, exclusions, or decline.
Adverse selection
People who know their risk is high are more likely to seek insurance. Underwriters use actuarial data to price groups accurately and prevent the pool from being skewed by high-risk applicants.
How underwriting affects your policy
Most personal lines policies (home, motor, travel) are now priced by automated underwriting models rather than individual underwriters. You may receive an automated decline or loading based on your risk profile without speaking to anyone. Commercial and high-value policies typically involve a human underwriter who can consider individual circumstances.
Non-disclosure at application — failing to reveal a material fact — can give the insurer grounds to void the policy or reduce a claim settlement. See exclusions and our guide to exclusions explained for how underwriting decisions translate into policy terms.