Which of the following generalizations is most accurate concerning underwriting?
A) A rate can be found for almost any risk, no matter how poor,
B) The underwriter depends only on statements by the applicant as a guide for acceptance or rejection,
C) Underwriting judgment is of only moderate importance in the successful operation of the insurance enterprise,
D) An underwriter has very little discretion since most of his or her decisions are already incorporated into set rules and regulations,
E) The main objective is to see that applicants accepted will have the loss experience anticipated when the rates were formulated.

Question

Quizplus · Accepted Answer

The main objective of underwriting is to ensure that the pool of applicants accepted will, as a group, have the loss experience anticipated when the rates were formulated. This helps in maintaining the financial stability of the insurance company and fairness among the insured.

Which of the Following Generalizations Is Most Accurate Concerning Underwriting