Insurance

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Underwriting
Insurance is a risk taking business. Each single day companies have the task of defining what good risks to take (assets) are and which simply (liabilities) aren't. An insurance company chooses its risks through the underwriting process with the help of an underwriter either a person or an automated one. Financial institutions, be it a bank, insurance company, or an investment company, use an underwriting process to determine whether a client is legible to receive a loan or a mortgage or credit as the financial product. It is a way of assessing whether the risk is worth taking or not.
The process of underwriting involves a variety of steps which include the following;
* Information Development
* Exposure Analysis
* Pricing to Exposure and
* Documentation
First is Information Development, before one decides to underwrite, good quality and quantity of information should be gathered and analyzed before a proper decision is made. Both objective and subjective information is required. In gathering this information, many aspects of an entity are scrutinized in determining what would be a good investment opportunity and what simply wouldn't be. Some of the aspects of an entity to be looked at may include;
* The financial status of each of the business owners at a personal level, and with this includes their returns on IRS (Internal Revenue System) tax forms.
* Credit and bank information of an individual, a group or a business entity
* The resumes of the main business partners in a business
* Contract schedules to check to check ability for completion of project stages.
* Financial position of the entity through balance sheets check , quality of these statements in relation with the project at hand
* The business plan of a business venture
Such information forms the backbone of the underwriting process hence should be verified always before being factored in the decision....