Growth in the life insurance underwriting market was positive in many countries in 2010, with a few countries experiencing a rebound in real premium growth relative to 2009. In some countries, such as Chile, the Czech Republic, Finland, Luxembourg, Portugal and Turkey, real annual premium growth exceeded 10 per cent.
However, some large markets, such as Australia, the Netherlands, Spain, and the United States, exhibited negative real growth, lowering average growth for the group of countries for which data on premium growth is available.
Insurance underwriters evaluate the risk and exposures of potential clients. They decide how much coverage the client should receive, how much they should pay for it, or whether even to accept the risk and insure them.
Underwriting involves measuring risk exposure and determining the premium that needs to be charged to insure that risk. The function of the underwriter is to protect the company's book of business from risks that they feel will make a loss and issue insurance policies at a premium that is commensurate with the exposure presented by a risk.
In 2010, the insurance sector partly overcame the effects of the crisis, with renewed premium growth in some countries (particularly in the life sector), positive investment returns, and a strengthened solvency position. However, the outlook for future economic growth and employment in developed countries remains uncertain and sluggish, clouding prospects for the industry.
The life insurance segment is characterised by underwriting losses in some developed nations, and underwriting profits in important emerging economies such as China, India, Brazil and Russia.
The life insurance segments in developed nations will record a rise in premium rates due to gradual recovery in their economies, meaning that life insurers will need to protect their margins.
As part of the underwriting process for life insurance, medical underwriting may be used to examine the applicant's health status (other factors may be considered as well, such as age & occupation).
The factors that insurers use to classify risks should be objective, clearly related to the likely cost of providing coverage, practical to administer, consistent with applicable law, and designed to protect the long-term viability of the insurance program.
For more information on the life insurance underwritings market, see the latest research: Life Insurance Underwritings Market
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