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Underwriting Capacity

Depending on the context this term may refer to: (a) a member’s allocated capacity (b) syndicate allocated capacity, with or without the addition of cover from qualifying quota share reinsurance; (c) the total underwriting capacity of all syndicates combined, with or without the addition of cover from qualifying quota share reinsurance; or (d) the underwriting capacity of an insurance company or a reinsurance company. Underwriting stamp The stamp that is applied to a slip by an underwriter to signify his acceptance of a risk. It shows the number and pseudonym of the syndicate or the name of the (re)insurance company for whom the underwriter acts and has a space for his underwriting reference to be inserted. The underwriter will insert his line on a slip next to his underwriting stamp.******The maximum amount of money an insurer or reinsurer is willing to risk in a single loss event on a single risk or in the aggregate on all risks in a given period. This is the limit of capacity for an insurer or reinsurer that may also be imposed by law or regulatory authority. Common NAIC aggregate underwriting capacity is 3:1 (i.e.three dollars of premium for each dollar of surplus) depending on line of business. Many states also impose a per risk limit of 10% of surplus.*****
The risk retention ability of an insurer or of the insurance industry as a whole. Determined by the amount of surplus.
***
US: The risk retention ability of an insurer or of the insurance industry as a whole. Determined by the amount of surplus.

Underwriting Capacity for Lloyd’s

Depending on the context this term may refer to: (a) a member’s allocated capacity (b) syndicate allocated capacity, with or without the addition of cover from qualifying quota share reinsurance; (c) the total underwriting capacity of all syndicates combined, with or without the addition of cover from qualifying quota share reinsurance; or (d) the underwriting capacity of an insurance company or a reinsurance company. Underwriting stamp The stamp that is applied to a slip by an underwriter to signify his acceptance of a risk. It shows the number and pseudonym of the syndicate or the name of the (re)insurance company for whom the underwriter acts and has a space for his underwriting reference to be inserted. The underwriter will insert his line on a slip next to his underwriting stamp.

Underwriting capacity/limit

The maximum amount an insurer or reinsurer is willing to accept in the event of a single loss in a given period. It also refers to the aggregate amount accepted in any one location or in a given period of time. The limit may be set by internal guidelines, by the regulatory authorities, or by restrictions agreed with a reinsurer or co-insurer.

Underwriting department

Section in an insurance company that chooses the risks that the company will insure and verifies that the mortality and morbidity rates of the company’s insureds do not exceed the rates adopted when premium rates were calculated. This division also negotiates and manages reinsurance agreements. Also called the new business department .

Underwriting Expenses Ratio

This represents the percentage of a company’s net premium written that went toward underwriting expenses such as commission to agents and brokers, state and municipal taxes, salaries, employee benefits and other operating costs. The ratio is computed by dividing underwriting expenses by net premiums written. A company with an underwriting expenses ratio of 31.3% is spending more than 31 rupee of every Rs. 100 of net premium written to pay underwriting costs. It should be noted that different lines of business have intrinsically differing expense ratios.