Underwriting Loss

What Does Underwriting Loss Mean?

Underwriting loss reflects the losses incurred after an insurance companies has paid out claims and accounted for administrative expenses for their insurance policies over a certain period.

Insuranceopedia Explains Underwriting Loss

When an insurance company has to pay out more claims than expected, and the premiums brought in do not cover the overall expenses, it results in underwriting loss. The amount reflects the inefficiency of the insurance company's underwriting activities. Underwriting losses mainly arise due to the result of huge claims and disproportionate expenses. However, there is a possibility that an insurance firm may take a hit on profits to gain market share.