What is underwriting?
The Securities and Exchange Commission (“SEC”) has directed that all public offers must be at least 80% underwritten by Issuing House(s) Underwriting therefore means the upfront payment of all or part of the Offer proceeds by the Issuing House to the Issuer as a means of warehousing the shares to prevent unsuccessful offers due to low subscription. The two forms of underwriting commonly used in the Nigerian Capital Market are Standby and Firm. While Standby Underwriting is contingent upon poor performance of an Offer, Firm Underwriting is normally done upfront.
An underwriter evaluates an application, claims histories, and hazards to recommend coverage as applied (you’ll pay the rate you were quoted) or coverage at some new premium rate. An example of the underwriting process as it applies to life insurance for example, would include reviewing the application and outcome of a medical exam, past doctor records, reports from the Medical Information Bureau (MIB) etc. If the agent that sold the policy did a good job when the application was originally taken—the applicant will be approved as applied and the underwriter will simply acknowledge that the correct rate was quoted and the policy should soon go in force. If the underwriter finds, after reviewing doctor records or the results of the medical exam, that the applicant is at an above average risk for a heart attack—then an adjustment will be made in health classification and the applicant will be asked to pay a higher premium. At worst—the applicant could be declined.
Medical Underwriting is both a physical and a lifestyle assessment of your profile made by the term life insurance company. Many factors are considered when the Insurance Company determines whether you fit the Preferred Plus, Preferred, or Standard classifications. For a detailed description of these many factors please visit our Underwriting Guidelines page. A very important note to visitors of QuoteNavigator.com: Some other term life insurance quotation services will quote ALL their potential customers at the Preferred Plus classification in order to present the lowest possible premiums. The problem with this practice is that most individuals (about 80%) do not qualify for this classification and are not made aware of this until they are presented with higher rates after waiting through several weeks to months of the term life insurance underwriting phase. Don’t let this happen to you. At QuoteNavigator.com we present you with the lowest priced premium quotes for your profile.
