Insurance term
Underwriting
How risk is assessed and priced
Definition
The insurer's or lender's process of assessing an application, sorting it into a risk group, and setting terms and price accordingly.
In more detail
Underwriting turns an application into a risk classification. The classification determines price, the terms offered, and whether cover is offered at all.
Different institutions weight the same information differently, which is the main reason quotes for identical requests diverge.
Glossary entries are general explanations, not advice. Where a term appears in a contract or policy, the definition in that document governs.