Underwriting and the Selection of a Liability Portfolio
The purpose of underwriting is to choose to cover, from all the risks which are proposed to the insurer, those which collectively will be profitable. Essentially, this means that probable claims and the associated handling expenses will be less than the technical reserves held against those claims, so that the proportion of the premium income remaining after providing for these reserves (together with any investment income from the reserves) is available for profit.
KeywordsPortfolio Selection Total Profit Claim Amount Operating Profit Investment Income
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