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14
Aug

Should Your SME Use an Underwriter for Insurance Coverage?

An insurance underwriter plays a key role in the insurance world, especially for businesses.
So, what do they do?

The Role of an Insurance Underwriter

The key difference between an insurance broker or adviser and an insurance underwriter is that brokers or advisers principally act on behalf of the insured, while an underwriter acts for an insurer.

An underwriter may be an Underwriting Agency, Lloyd’s Coverholder, APRA regulated insurer or an Unauthorised Foreign Insurer.

Essentially, underwriters are the gatekeepers of the insurance industry. They assess the risk of insuring a client and determine the coverage terms and costs. Underwriters decide if offering insurance to a particular client is a worthwhile or the insurance company.

By evaluating the risks involved, they help ensure that the insurance company stays profitable while protecting clients. The primary responsibilities of an insurance underwriter include to:

  • Assess risks
  • Determine coverage terms, and
  • Set premium rates.

They scrutinise various factors to decide whether to offer insurance and under what terms. Their expertise ensures that the insurance company can cover claims and expenses.

Underwriters work in different areas, spanning life, health, property, and casualty insurance, each requiring specialised knowledge and skills.

How Does an Insurance Underwriter Work?

When an insurance application lands on an underwriter’s desk, they follow a detailed process of evaluation. First, they gather information about the applicant, such as the type of business, its location, and claims history, to help assess the level of risk involved. Industry-specific data can give them a clearer picture.

The financial service laws and the General Insurance Code of Practice in Australia may regulate their conduct and the name of information requested for certain classes of insurance.

Once they’ve assessed the details, an underwriter decides on the coverage terms and premium rates. This process ensures that the insurance is appropriate for the level of risk presented.

The Role of Insurance Brokers or Advisers 

As an insurance broker or adviser, we act as an intermediary between your business and the insurance underwriter. We act on your behalf, not on behalf of the underwriter. We’re not tied to any one insurance company, so can shop around to find the best policies for your needs. Humbly, we bring a wealth of knowledge and expertise, helping you navigate the complexities of insurance.

Brokers or advisers can access many insurance options to help you get the best deal. Importantly, we also advocate for you during claims, making sure you get that to which you are entitled.

Connecting Underwriters and Brokers or Advisers

Insurance underwriters and brokers or advisers work together to offer comprehensive insurance solutions. Here’s a key difference:

  • The underwriter focuses on assessing risk and setting terms, while
  • The broker or adviser works to find the best match for your unique business needs and circumstances.

We simplify the process of dealing with underwriters, so it’s easier for your SMEs to secure the most appropriate coverage. For instance, if you’re unsure about the risks associated with your industry, we can explain and update you on these in detail. We’ll also work with the underwriter to be sure your policy covers these risks adequately. By collaborating, we’ll certain you’ll receive a well-rounded insurance solution tailored to your business.

By understanding the roles of both underwriters and brokers or advisers, you can make informed decisions about your business insurance needs. Talk to us for more info.

Article Supplied by OneAffiniti

Photo by Nansan Houn on Unsplash

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