Misclassification Impedes Insurers’ Ability to Underwrite Risks

July 23, 2019 by Piyush Singh

Over the years, one of the key challenges for insurers in underwriting small and midsize businesses involves misclassification of the risk. Not surprisingly, more often than not, inaccurate classifications typically result in inadequate premium charged for a particular risk. This outcome arises when the applicants or their agents and brokers fail to provide full exposure details required for effective underwriting.

Here are some examples encountered by a senior underwriting executive in recent months: