Casualty Actuarial Society (CAS) Practice Exam

What are key activities performed by line underwriters in the underwriting process?

1. Selecting insureds, classifying and pricing accounts

2. Conducting inspections, auditing claims

3. Managing marketing campaigns, negotiating premiums

4. Researching regulations, filing formal complaints

The correct answer is: Selecting insureds, classifying and pricing accounts

Selecting insureds, classifying, and pricing accounts are fundamental activities that line underwriters engage in during the underwriting process. This involves evaluating the risk associated with potential insured parties and making decisions regarding whether to accept a risk, how to classify it, and how to price the insurance policy appropriately. Line underwriters assess applications for insurance by gathering necessary information about the insured's profile and the nature of the coverage being sought. This involves analyzing various factors such as the applicant's history, the specific risks involved, and market conditions. By classifying accounts, underwriters can group similar risk profiles, which allows for more accurate premium pricing based on statistical data and modeling. These actions are critical in ensuring that the insurance company maintains its financial stability while also offering fair and competitive pricing to insureds. Ultimately, the decisions made during this phase can significantly impact the insurer's portfolio and overall profitability.