Selection of Risks: American Viewpoint and Practice

This Paper outlines the underwriting practice of the life insurance companies in Canada and the United States where, because of the importance of mortality results in the successful operation of a life insurance company, underwriting is considered to be a major executive function. There is a discussion of general underwriting considerations and a more particular discussion of general underwriting practice. This covers the use of an Underwriting Manual, the Numerical Rating System, the use of additional information such as statements from attending physicians, special tests, etc., the question of non-medical insurance and the methods of setting up substandard classes. Mortality investigations of various kinds are considered from the Underwriter's viewpoint which is to test the results of underwriting both in general and on particular impairments. There is a discussion of some current problems such as insuring female lives, insuring hypertensives, and the use of experimental underwriting. The final discussion is on the importance of establishing an underwriting goal for the life insurance company, a goal which should be made clear to the agency force. It also stresses the importance of a good agency force in achieving the desired results.