Casualty Actuarial Society (CAS) Practice Exam

The evaluation of adherence to underwriting guidelines is crucial for ensuring that underwriters are accurately assessing risks and complying with established procedures. Conducting underwriting audits serves this purpose effectively. These audits involve comprehensive reviews of the underwriting processes, decisions, and the rationale behind them. By systematically examining a sample of underwritten policies, auditors can identify any discrepancies between the actual practices and the formal guidelines. This method provides a structured approach to assess compliance, identify areas for improvement, and enhance overall underwriting quality.

While other methods such as random policy renewal checks, gathering feedback from insureds, and performance appraisals by senior management can provide insights into underwriting performance, they do not offer the same level of systematic review and focused assessment of guideline adherence as audits do. Random checks may be too sporadic to capture consistent adherence, feedback from insureds typically focuses on customer experience rather than internal processes, and performance appraisals may not specifically evaluate compliance with underwriting guidelines.