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    Underwriter

    Who is an underwriter?

    • An underwriter, sometimes known as book runner, is an individual or entity that evaluates and assumes another party's risk for a payment.
    • This payment takes the form of a commission, premium, spread, or interest.
    • Underwriters determine the level of the risk for lenders.
    • They are critical to the mortgage industry, equity markets, insurance industry, and common types of debt security trading due to their ability to ascertain risk.

    Role of an underwriter?

    • Investors rely on underwriters to determine if a business risk is worth taking.
    • Underwriters also contribute to sales-type activities during an Initial Public Offer.
    • He or she also has the job of determining the likelihood that a policyholder will submit a claim, in case of an insurance contract.

    Types of underwriters

    • Mortgage underwriters
    • Insurance underwriters
    • Equity underwriters
    • Debt security underwriters

    What is the difference between underwriters and agents/ brokers?

    Underwriter

    • Underwriters assess, evaluate, and assume risk on behalf of other parties.
    • They solely represent the interests of the company they work for.
    • They hold the final say on whether to assume risk or not.

    Brokers/Agents

    • Brokers and agents act as portals between customers and organisations.
    • They represent the interests of both the customer and their employers.
    • Agents and brokers submit applications from clients but have no significant weight on the matter of approval or rejection.
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