Insurers (or underwriters) write the contracts of insurance on behalf of customers or "Insured", agreeing to pay or "indemnify" the insured for losses that they incur in accordance with the contract of insurance. Insurers sell contracts of Insurance either directly or via Underwriting Agents and/or Brokers. These contracts are known as Insurance Products and vary across many different exposures including Property, Public & Products Liability, Motor (Personal, Commercial Fleet, Heavy Motor), Management Liability, Professional Indemnity, Marine, Aviation, Political Risk and Kidnap & Ransom just to name a few!
The theory is pretty simple - collect the premiums from the many to pay the claims of the few. This creates a pool of money from which the Insurer is able to pay claims. It also provides money for the Insurer to invest, in order to create more capacity which in turn means they can offer larger limits of insurance to their customers. Insurers in Australia are monitored by Regulators such as APRA to ensure that they have enough money to meet the claims of their customers.
Given that an Insurance contract is basically the transference of risk from one party (the insured) to another party (the insurer) for a price, Insurers themselves may want to transfer some or all of a certain risk or portfolio risk onto another party - this party is called a Reinsurer.
Click on the links below for more detailed roles which exist within a typical large insurance company:
- Business Development Manager (BDM)
- Claims officer
- Customer Service Representative
- Project Management
- Risk Engineer
See also, the video below on how insurance works and is written by underwriters: