Many of the articles listed on this website refer to the process of underwriting, But what does underwriting mean.

Underwriting is the process by which an Insurer will determine if an applicant for cover is a suitable risk based on their guidelines.

In layman’s terms, this is the process of the insurance company looking at all the factors applicable to the application including medical history, height & weight, sporting activities & pastimes and family history and determining if that chance of a claim being lodged is reasonable. Below is a general list of the types of things that an underwriter will look for in an application and what action they may take in response:

Medical History:

When an application for insurance is submitted to the insurance company a series of questions are asked in the application relating to medical history. These questions ask if the applicant has ever suffered from a number of events. Some examples include:

• Heart Attack;
• Asthma;
• Cancer;
• High Blood Pressure;
• Sleep Apnoea;
• Prescription Medication taken regularly;
• Operations or Medical Scans;
• Genetics Testing;
• Depression;
• And many more.

Where an applicant notes that they have been affected by any of the events noted in the application the underwriter, depending on the severity of illness, will choose one of four options. Firstly, to decline the application based on the medical history. Secondly, the underwriter may exclude any event relating to that illness. Thirdly, the insurer may apply a loading to the policy and finally, where the event is only minor they may not amend the policy at all.

To determine the severity of the event the underwriter will generally write to your doctor or medical centre to obtain further details of the event directly from them.

Height & Weight:

Your height and weight can have a dramatic effect on the underwriting of any policy. Where an applicant is considered to be obese, using the BMI (Body Mass Index), an insurer may apply a loading to the policy. The underwriter will also pay greater attention to the medical history of any applicant with a high BMI.

Where the underwriter is concern about the BMI of an applicant they will arrange either a paramedic service to meet with the applicant or a medical to be completed with the applicants own doctor. The underwriter may also request a blood test be completed.

Sporting & Pastimes:

Generally speaking Australians are a fit and health people with the majority of the population engaged in some form of sporting activity. Certain sports and pastimes will cause an underwriter to investigate an application in further detail. Some examples of activities that may cause concern are:

• Soccer, football, touch football, Rugby Union;
• Scuba Diving;
• Motor Sports;
• Abseiling, Rock Climbing or Caving;
• Aircraft Travel (except as a fare paying passenger).

Where an applicant advises of a sporting pastime the underwriter will attempt to obtain further information regarding the activity. The decision by the underwriter will be effected by the level of competition involved (E.g: Are they Professional, Amateur or just competing for fun) and the frequency that the applicant is involved in the activity. Depending on the above the underwriter may elect to put an exclusion on the policy relating to the specific activity or apply a loading to the policy as a whole.

Family History:

It is rare that the family history for an applicant will have an effect on an application. The main situation where the family history will be reviewed is where a number of the close relatives have been affected by the same medical event such as a particular type of cancer.

Generally, where three immediate relatives have suffered from the same illness an underwriter will excluded that particular event from cover.

Obviously, each company will underwrite their policies in a different manner and with different requirements in mind. It is also important to note that when lodging an application for insurance a Duty of Disclosure applies and all information must be provided to the insurer to allow them to make an informed decision.

If you are suffering from any medical problems, or have in the past, this will not automatically result in you being unable to get cover. Talk to an Insurance Advisor for further information.