Author: FastInsurance24.com

underwriting cash flow ratio: The sum of premiums collected net of reinsurance plus other underwriting income divided by the sum of loss and loss adjustment expenses paid plus underwriting expenses paid plus other underwriting expenses.

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underwriting: The underwriting process evaluates the likelihood an insured event will occur, determines its likely cost and develops an appropriate premium for the coverage that is competitive in the marketplace and remunerative to the insurance company writing the policy. For some standardized coverage’s that are highly competitive, underwriting may be somewhat besides the point — the policy has to be priced according to marketplace pressures if the insurer wishes to remain in that line of coverage. Underwriting still plays a substantial role for many coverage’s, however, even those in the increasingly competitive businesses of auto, home and term life insurance. Insurance companies donÆt all target the same slice of the market in the same states, and thus often have different objectives in their underwriting efforts as well as different cost structures that determine operating profit margins in their underwriting calculations. Underwriting differences account in part for the substantial differences in insurance premiums for comparable coverage’s.

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underwriter: (1) A company that receives the premiums and accepts responsibility for the fulfillment of the policy contract(2) The company employee who decides whether or not the company should assume a particular risk (3) The agent who sells the policy

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unallocated benefits: Benefits with a maximum amount but without specific limits on the extent of benefit for each service rendered.

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umbrella liability: If your auto and home are insured with the same carrier, you probably can get supplemental liability coverage from your insurer. This is generally a very good and affordable idea, but only if you have underlying wealth that needs to be shielded from lawsuits. By insuring your car and home, it is cost-effective for your insurer to extend bigger-dollar liability coverage to both areas (hence the “umbrella” concept). If, for example, you have 100/300 auto liability ($100,000 liability for each person insured in an accident; $300,000 total liability for the accident) and $100,000 liability on your homeowner’s insurance, you can usually extend this to $1 million for a few hundred bucks a year (premiums vary by company and its assessment of your own risk).

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