What's the difference between joint underwriting and firm underwriting?
submitted by myself

rob_dale

Joint underwriting is when multiple insurers underwrite a policy together. Basically they share the risk of working with a particular client.

Each of the insurers takes a portion of the risk. Consequently, they share in the premiums and claims too. They might not do a 50/50 split. They may do an 80/20, for example. In those cases, they'd each take premiums and be responsible for claims in proportion to their percentage. The company that only take 20% of the risk only gets 20% of the profits.

This is something you might see in bigger high-risk policies. A single insurer might not want that whole obligation, but with some help it becomes feasible.

Firm underwriting, on the other hand, involves a single insurer taking on the entire risk for a policy. The insurer has the flexibility of accepting or rejecting the risk as they see fit.

jake

That's when two (or more) insurance companies share the risk of giving someone insurance. They work together and split the money and responsibility.

The other method is firm underwriting, where just one insurance company takes on the client.