Group Underwriting
Definition of "Group underwriting"
Process of forming a large group of homogeneous lives that in order to allow the law of large numbers to operate, thereby projecting a probable rate of mortality or morbidity whose creditability approaches one, and standard deviation approaches zero. Since no evidence of insurability has to be submitted on an individual basis, the objective of this type of underwriting is to minimize adverse selection by any member of that group. In an effort to achieve this minimization, certain underwriting rules apply: the group must be formed for reasons other than obtaining insurance, or people who have a particular disease would join together for the sole purpose of buying insurance; a constant flow of young people into the group and outflow of older people out of the group is required so that, statistically, the average person (standard health) will continue to be insured; the insurance benefits should automatically be determined by some type of formula on behalf of the members, or only those members who are in poor health would select the higher limits of coverage; and close to total participation of all eligible employees should be achieved.
Popular Insurance Terms
part of the Model Uniform Life and Health Insurance Policy Provisions Law giving an insurer a time limit on contesting coverage for preexisting conditions or misrepresentation. This law, ...
Picture of future dividends that the insurance company expects to be allocated to a specific block of policies. The accuracy of this picture depends on the actual future mortality, ...
Same as term Coinsurance: ...
Coverage for an insured firm if its business debtors fail to pay their obligations. The insured firm can be a manufacturer or a service organization but it cannot sell its products or ...
Mathematical premise stating that the greater the number of exposures, (1) the more accurate the prediction; (2) the less the deviation of the actual losses from the expected losses (X - x ...
Individual action or failure to act as a reasonably prudent person would under similar circumstances, resulting in harm to another. Also called negligence. A reasonably prudent person is ...
A ceding company's premium to which the reinsurance premium factor is used to produce the reinsurance premium. ...
Difference between the actual mortality experience and the expected mortality experience. In statistical terms, this is known as the deviation of the actual (X) from the expected (X). The ...
Time interval between the date benefits end under Social Security and the date these benefits resume. For example, survivor benefits are paid only as long as the parent (if less than age ...
Have a question or comment?
We're here to help.