What is the primary function of an underwriter?

The primary function of an underwriter in the insurance industry is to select those risks that are most likely to be profitable to the insurer. This involves assessing the risk profile of potential policyholders by evaluating various factors such as historical claims data, the applicant's behavior, and overall market conditions. By doing so, underwriters ensure the insurer avoids taking on too much risk, thereby maintaining financial stability and profitability.

Underwriters play a critical role in determining which applications for insurance coverage should be accepted and at what terms. This function is crucial since it directly impacts the insurer's overall financial health and ability to provide coverage to its clients. Their decision-making is backed by data analysis and guidelines set by the insurance company, which helps in creating a balanced portfolio of risks.

While binding coverage, setting premium rates, and managing cancellations are important functions within the insurance process, these tasks are secondary to the core responsibility of underwriting, which is primarily focused on risk selection and assessment.