Many jobs must be carried out for an insurance company to operate. Underwriters are responsible for selecting the people and properties the company will insure. The way underwriters know which business to accept is determined by how the insurance company defines its market. That is, every company must decide which risks they want to accept and how much they must be compensated to accept those risks. Their insurance contracts and rates reflect their marketing decisions.
Underwriters consider many things in making their decisions.
For example, having to drive 50 miles to work each day is a hazard that increases the likelihood of an accident. Risks are the possibilities of a loss. Determine what premium is sufficient for coverage. Determine rates that are fair for the company and the policyholder. Help determine the reserves and surplus the company must establish to cover future losses.