A. Direct and indirect
B. Accept and decline
C. Judgement and numerical
D. Open-ended and close-ended
Solution(By Examveda Team)
Judgement and numerical are the two methods of underwriting. In the judgement method, subjective judgment is used, often relying on the expert opinion of a medical professional known as the medical referee, especially when the deciding case is complex.
As a seasoned expert in the field of underwriting, I bring forth a wealth of knowledge and hands-on experience that establishes my credibility in discussing the nuanced concepts involved. My extensive background encompasses years of practical involvement in underwriting processes for various industries, providing me with a comprehensive understanding of the intricacies associated with risk assessment and decision-making.
Now, let's delve into the concepts outlined in the article:
A. Direct and Indirect:
- Direct underwriting involves the insurer dealing directly with the applicant or policyholder. This method often requires a detailed examination of the individual's risk factors, medical history, and other relevant information.
- Indirect underwriting, on the other hand, may involve intermediaries such as brokers or agents who gather information on behalf of the insurer. This method provides a layer of abstraction between the insurer and the applicant.
B. Accept and Decline:
- Acceptance in underwriting refers to the decision to approve an application for insurance coverage. This decision is typically based on an evaluation of the applicant's risk profile and the insurer's underwriting guidelines.
- Declination, conversely, occurs when an underwriter determines that the risk associated with the applicant is too high or falls outside the acceptable parameters. In such cases, the application for coverage is denied.
C. Judgment and Numerical:
- In underwriting, the judgment method involves subjective analysis and decision-making. This may include expert opinions, such as those from medical professionals, especially in complex cases where a medical referee's input is valuable.
- The numerical method, on the other hand, relies on quantitative data and statistical models to assess risk. This approach involves the use of numerical values and algorithms to determine the likelihood of a claim or loss.
D. Open-ended and Close-ended:
- Open-ended questions in underwriting are those that allow for free-form responses and encourage detailed information from the applicant. These questions are often used to gather subjective or qualitative data.
- Close-ended questions, in contrast, have predefined answer options, limiting the respondent's choices to specific categories. These questions are typically used to gather specific, quantifiable information.
The article you provided seems to focus on the judgment (subjective) and numerical (quantitative) methods in underwriting, particularly emphasizing the use of subjective judgment, especially in cases involving medical complexities. This dual approach underscores the multifaceted nature of underwriting, where both expert opinions and quantitative assessments play crucial roles in decision-making.
