Why might an insurer delegate underwriting?

An insurer might choose to delegate underwriting primarily to speed up the process and reduce administrative costs. By outsourcing or delegating certain underwriting tasks, insurers can streamline operations and improve efficiency. This approach allows the insurer to allocate resources more effectively, letting underwriters focus on more complex or higher-value risks that require expert assessment, while simpler tasks may be handled by delegated authorities or automated processes.

In doing so, the insurer can not only enhance turnaround times for policy applications but also keep a lid on operational costs by employing external expertise or technology without needing to maintain a larger internal underwriting team. This efficiency ultimately leads to better customer satisfaction due to quicker decision-making.

While reduction of non-disclosure risks, compliance with industry associations, and ensuring only good quality risks are accepted are important aspects of underwriting, they do not directly encapsulate the primary motivation for delegation, which is to enhance operational efficiency and cost-effectiveness.