What Is Casualty Underwriting?

Casualty underwriting is risk assessment for the insurance industry for the purposes of determining the terms of a casualty insurance policy. Casualty insurance is somewhat difficult to define, as the insurance industry itself does not completely agree on what, exactly, it covers, but generally it addresses the potential for property losses and injuries with things like vehicles and boats. A car insurance policy, for example, is a type of casualty insurance, and the policy will cover negligence on the part of the driver as well as random accidents, like a boulder rolling into a car and damaging it.

Professionals in the field of casualty underwriting may focus on a specific type of casualty insurance, as this is a very broad umbrella term within the insurance industry. They can assess the potential risks associated with a customer, looking at the profile of the customer and the property being insured. Young drivers tend to be riskier, for example, while some cars are more prone to theft. The underwriter's job is to determine the chances that the insurance company will need to make a payout.

The purpose of casualty underwriting is to make a decision about whether to offer insurance, and how much coverage to offer. Underwriters also concern themselves with how much to charge. A customer representing a higher risk will need to pay more, as the risks for the insurer are much higher. Customers representing a low risk may pay less for more coverage because the insurer believes it will probably not have to pay out.

Casualty underwriting requires a firm knowledge of statistics and demographic profiling. Underwriters need to be able to evaluate data and put it in context when making policy decisions. This typically includes following the latest trade publications as well as maintaining internal data for the benefit of the insurance company. Underwriters can use this data to look at issues like how geography might affect the chances of a payout on a given policy.

Insurance companies can offer casualty underwriting training, usually to applicants with a college degree in statistics or a related field. The insurance company will familiarize employees with its own policies and information databases so its underwriters can make consistent rulings on applications for insurance, with the goal of preventing discrimination. Some underwriters also act directly as insurance agents, representing the company in interactions with customers and working with clients on finding the most appropriate policy for their needs.