Underwriting is the process of deciding whether to accept an insurance risk and what premium to charge.
An underwriter evaluates information relevant to the likelihood and potential cost of a loss. Depending on the product, this may include medical history, driving records, property characteristics, business operations, financial information, or catastrophe exposure.
The result can be acceptance on standard terms, acceptance with exclusions or higher pricing, or rejection. Underwriting is distinct from claims adjustment, which evaluates a loss after a claim has been submitted.
The word also has a long connection with insurance markets. In the Lloyd’s market, individuals historically wrote their names under a proposed risk to indicate the amount they were willing to accept, helping give the process its name.