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how the risk manager strategy be affected by underwriting market ?

how the risk manager strategy be affected by underwriting market ?

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Answer #1

The underwriting market plays an essential part in the risk management strategy.

Underwriting is the process where usually a financial institution or an individual first buys the initial securities and sells it to the market agreeing to undertake a financial risk for a fee.

However there arises an issue when faulty underwriting is made. This type of risk is often referred to as underwriting risks. Risk management strategy is affected when the insurer in order to procure a larger market share underestimates the risks associated with extending coverage, it ends up making the company pay more than the premium and hence affecting the solvency.

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