Casualty Actuarial Society (CAS) Practice Exam

Which step is NOT a part of the general underwriting process?

1. Evaluate alternative premiums

2. Select an underwriting alternative

3. Implement the underwriting decision

4. Monitor the underwriting decision

The correct answer is: Evaluate alternative premiums

The general underwriting process typically involves several key steps: evaluating the risk associated with an application, selecting the appropriate underwriting alternative for managing that risk, implementing the chosen decision, and monitoring the outcomes to ensure the underwriting criteria are met and that the risks remain acceptable. Evaluating alternative premiums, while important in aspects of pricing strategies and negotiations, is not fundamentally a part of the underwriting decision-making process itself. Instead, it reverses the pathway by addressing how to price the risk after the risk assessment and underwriting choices are made. The other steps involve the systematic evaluation of risk, choosing the right course of action, executing that action, and then reviewing its effectiveness to adjust as necessary, which are all integral to underwriting.