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App underwriters are vital players in the economic playfield. In the highly important and heavily regulated worlds of insurance, banking, and investments, underwriters act as investigators who assess the available resources of their company in conjunction with the needs of their companyâs customers.
In simple terms, an underwriter is a risk manager. They stand guard at the companyâs metaphorical money vault and determine who can safely take from its contents, under what circumstances, and how much they can take before the company risks becoming unstable. With insurance, a consumer âapproaches the vaultâ when they submit an application to their chosen insurance company. The application is basically, the consumer walking up to the underwriter guard and saying, âIâd like to use the money in this vault if X happens to me, and here are all the reasons why you should let me.â
The underwriter then examines their application, runs a detailed investigation to determine if what they say is true, and either denies them or allows them access to the money in the vault. For more details on the role underwriters fulfill, this article and this article are useful resources.
App Underwriters in the World
For a more real-world example, letâs walk through a basic property insurance scenario. Amelia is applying for homeownerâs insurance. She sends in an application asking for $1,000,000 in coverage in the event that her home is destroyed by a natural disaster. Her home is located in New England where tornados, floods, earthquakes, and hurricanes are rare, and so the chance that the insurance company will ever have to give her that $1,000,000 is almost nonexistent. Because the risk she presents is so low, the underwriter accepts her application. Amelia will pay monthly bills to keep her coverage active which the insurance company will pocket and use to run their business, confident that theyâre making money from her premiums and wonât have to send her anything later down the line.
Here’s another scenario: James is applying for health insurance. He is in his mid-thirties, has never been to the emergency room, doesnât suffer from any chronic conditions, maintains a healthy weight, keeps active, and attends his yearly checkups. However, James has recently developed a smoking habit, and so the future of his health is suspect. The underwriter looking over his application will weigh all the factors that contribute to his health against all the factors that endanger his health. After a thorough investigation, the underwriter determines that the insurance company canât accept his application because smoking directly causes conditions like cancer, emphysema, and strokes, all of which would cost the insurance company too much money in medical bills should he get sick, which is highly likely. The underwriter knows that the company canât afford to take on his risks without potentially destabilizing the business.
That said, underwriters do much more than approve or deny applications. In their risk assessments, they also evaluate and amend contract terms on a case-by-case basis, tailoring each policy and its price to fit the clientâs profile. They also revisit client information regularly to loop new data into their case. Underwriting isnât a one-and-done deal, itâs an ongoing relationship between the applicant and the company. Things need to be verified continuously.
For example, if Morgan wants to buy automobile insurance for a new ride after his previous car was totaled, the underwriter will look at Morganâs driving record, age, health, car make and model, etc. If the underwriter determines that the company can afford to take him on as a client but still wants to account for the likelihood of him getting in another car accident, they may tweak the terms of the insurance policy to cover less or raise the monthly premiums so the risk Morgan presents to the company is mitigated. After a probation period of safe driving has passed, the underwriter may revisit Morganâs profile and lower his bill amounts and contract terms to reflect his responsible driving.
So What?
So, why do app underwriters matter so much? First, underwriters help keep companies financially stable. By carefully assessing and pricing the risks of the clients they take on, the company can confidently pay the claims of clients in need without worrying about going under. They make sure that enough money is being made through client premiums, deductibles, and other payments so they can provide monetary assistance to clients with destroyed homes, chronic illnesses, totaled cars, etc.
Secondly, underwriters provide vital information to stockholders. They learn a lot about the company they work for and its clientele in their assessments, and this information is used to educate investors and help them choose what, when, and how to invest, if at all. Stockholders need to be educated well for a company to reap the benefits of their investments.
All in all, underwriters play a crucial role in gauging risk, facilitating the flow of capital, and maintaining the stability of their associated markets. Whether you see the underwriter as a risk manager or an armored guard at a high-security vault, they exist to protect the companyâs assets while also protecting as many consumers as possible. They are masters of give and take, math and money, probability and potential.
Agents
We hope that this information on app underwriters and the role they play in the insurance industry has been useful to you.
Empower Brokerage is dedicated to helping you make informed decisions about your health and finances. Whether itâs through webinar training, one-on-one calls, seminars, or marketing plans, we want you to be successful!
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Born in and raised in Maryland, educated in Utah, and new to Texas, Cristin is a purveyor of stories from all widths and walks of life. With a bachelor’s degree in filmmaking and a staunch passion for literature, she aspires to give digital spaces a uniquely human touch.
