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Insurance underwriting process: what is it and how does it work?

You’ve likely heard of the term ‘underwriting’ before, especially in relation to insurance. But, do you know what it entails? Every potential policyholder looking to buy insurance will have to go through an insurance underwriting process. It assesses your risks to determine an appropriate premium. Read on for Pacific Prime Latin America’s rundown of the process, so you know what you’re getting into.

Individual health insurance blog

What is insurance underwriting?

We all carry our own unique risk profiles. That’s why it’s a gamble every time an insurer signs a contract with a client to cover the costs of their future losses and/or health problems. For instance, you could be suffering from a genetic heart condition requiring lengthy, expensive medical treatment. Alternatively, your new house could be built recently with high-quality materials.

Thus, the wrong premium pricing could lead to steep financial losses for the insurer. Of course, you likely wouldn’t want to pay more than the fair price either. Here’s where the insurance underwriting process shines.

The insurance underwriting process involves evaluating the risks you present when applying for insurance to establish the corresponding premium amount. Simply put, your risk profile affects two things: how much coverage you’re eligible for and how much you pay for premiums.

What do insurance underwriters assess?

Insurance underwriters access different types of risks depending on the policy you purchase.

This is a quick overview of what underwriters look for:

  • When it comes to life insurance, they assess the risk of early death.
  • When it comes to health insurance, they evaluate your risk of illness or injury.
  • When it comes to home and auto insurance, they calculate the risk of things like theft, fire, flood, fraud, and more.

Below are some of the specific areas they typically assess:

  • Age
  • Gender
  • Address
  • Citizenship status
  • Occupation or employer
  • Income
  • Tobacco use
  • Alcohol use
  • Foreign ravel
  • Hobbies
  • Driving record
  • Criminal history
  • Credit rating
  • And more.

What is the insurance underwriting process like?

This is how insurers decide whether your application is “worth the gamble”. Nowadays, the insurance underwriting process is mostly done with automated systems. However, some insurers still rely on agents.

Note: Pacific Prime Latin America also has an online underwriting tool to help you compare health insurance quotes for free.

See below for how underwriters generally assess your application details and the tools they use.

  1. Apply to your policy of choice. The completed application goes through either an underwriting system or the insurance company’s underwriters.
  2. Your application gets reviewed to determine the kind of coverage or perils your insurer agrees to cover and under what conditions.
  3. Decide on whether you want to buy the insurance at the price and terms your insurance company offered.

Note: Each insurance company has its own set of underwriting guidelines. Some companies may require extra steps. For instance, if you’re applying for life insurance, particularly in the U.S., your application will also need to be checked by the Medical Information Bureau.

Commonly used underwriting tools

Requirements differ depending on your situation, but underwriters typically review your application with the following tools:

  • Attending physician statement: Prepared by your doctor, this is a summary of your medical history.
  • Blood test: You may be required to submit both a blood profile and a urinalysis.
  • Paramedical exam: This involves a third-party paramedical examiner who gathers information on not only your medical history, but basic measurements (i.e., height, weight, blood pressure), as well as a blood test and a drug test.
  • Tele-interview: This interview gathers information over the telephone on your medical history and lifestyle.
  • Senior focus interview: Some insurance companies require an interview for potential mature policyholders if you’re 71 or older. As you age, your risk of health problems increases over time. This interview evaluates your lifestyle habits and tests your cognitive and mobility skills.

Note: Watch out for common health insurance exclusions – all of which are not likely to be covered in your health plans.

Learn more about insurance with Pacific Prime Latin America

We understand that insurance can be confusing and full of jargon. That’s why we’re here to simplify insurance for you. You are more than welcome to check out our wealth of resources, be it our up-to-date blog posts, videos, or guides.

Did you know? Insurance brokers can streamline the underwriting process by shopping around your underwriting results to different providers to get the best pricing. Secure individual health insurance in Mexico today! Pacific Prime Latin America leverages our long-standing partnerships with top insurers to find the best plans that meet your needs and budget.

Compare health insurance quotes now for free with our quotation tool! Reach out to our team of insurance experts today for impartial advice and a free plan comparison.

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Senior Content Creator at Pacific Prime Latin America
Serena Fung is a Senior Content Creator at Pacific Prime, a global insurance brokerage and employee specialist serving over 1.5 million clients in 15 offices across the world. With 2+ years of experience writing about the subject, she aims to demystify the world of insurance for readers with the latest updates, guides and articles on the blog.

Serena earned her Bachelor’s Degree in Psychology from the University of British Columbia, Canada. As such, she is an avid advocate of mental health and is fascinated by all things psychology (especially if it’s cognitive psychology!).

Her previous work experience includes teaching toddlers to read, writing for a travel/wellness online magazine, and then a business news blog. These combined experiences give her the skills and insights she needs to explain complex ideas in a succinct way. Being the daughter of an immigrant and a traveler herself, she is passionate about educating expats and digital nomads on travel and international health insurance.
Serena Fung
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