How An Underwriter Can Use Hobbies to Assess an Applicant’s Risk
When underwriting a policy, insurance companies take into account many factors to determine an applicant’s risk level. Factors such as age, income, and occupation play a significant role in underwriting decisions. However, hobbies are one factor that is often overlooked yet can provide crucial insight into an applicant’s risk level.
The Importance of Hobbies in Underwriting
A person’s hobbies can reveal a lot about their lifestyle and behavior. For example, an applicant who enjoys extreme sports like skydiving or bungee jumping may be seen as a higher risk than someone who prefers more low-key activities like gardening or reading. Similarly, a person who enjoys drinking heavily or smoking may be seen as a greater risk for health problems than someone who doesn’t.
Underwriters and the Assessment of Hobbies
Underwriters are trained to assess an applicant’s hobbies and determine how they may impact their risk level. Insurance companies will often ask applicants about their hobbies on insurance applications, and underwriters will use this information to determine the applicant’s risk level and premium.
Underwriters will consider various factors when assessing hobbies, such as the level of risk involved, the frequency of participation, and the applicant’s level of experience. For example, an applicant who only goes bungee jumping once a year may be seen as less of a risk than someone who does it every weekend.
Case Studies and Examples
A study by insurance broker Oval Insurance Broking found that people who listed running as a hobby had the lowest number of insurance claims, while those who listed football had the highest number of claims. This is because football has a higher risk of injury than running.
Another example is smoking. As we know, smoking is a major risk factor for health problems. Insurance companies will often charge smokers more for life insurance policies than non-smokers. In some cases, smokers may even be denied coverage altogether.
Conclusion
In conclusion, hobbies are an important factor that underwriters consider when assessing an applicant’s risk level. Whether it’s through the level of risk involved, the frequency of participation, or the applicant’s level of experience, an applicant’s hobbies can reveal a lot about their lifestyle and behavior. As such, it’s essential for applicants to be honest about their hobbies on their insurance applications, and for underwriters to carefully consider how they impact the applicant’s risk level.
