Alberta General Insurance Level 1 Practice Exam

Which of the following is NOT a role of underwriters?

1. Accepting or rejecting risk

2. Investing of capital

3. Direct marketing to potential insureds

4. Implementing an insurer's strategic plan

The correct answer is: Investing of capital

Underwriters are primarily responsible for assessing risks and determining the terms under which insurance can be offered. This includes accepting or rejecting risk based on various factors such as the likelihood of a claim being made and the potential financial implications for the insurer. They utilize their expertise to analyze applications and decide whether to provide coverage. Implementing an insurer's strategic plan is also within the scope of underwriters' responsibilities as they ensure that the risks they accept align with the company's objectives and market positioning. Additionally, they may contribute to direct marketing efforts by assisting in targeting appropriate markets for the insurance products offered, although this is not typically their primary function. However, investing capital is not a role of underwriters. This activity usually falls under the purview of financial officers or investment managers within an insurance company. Their focus is on managing the insurer's assets to generate returns rather than evaluating risks and underwriting insurance policies. Hence, out of the options provided, investing capital is not a function associated with underwriters.