State Farm Auto Insurance Practice Test

What information is critical to review on the underwriting review screen's loss history?

1. The driver's age

2. The total premium amount

3. The company's standard placement conditions

4. The loss history report

The correct answer is: The loss history report

Reviewing the loss history report is essential during the underwriting process because it provides a comprehensive overview of past claims associated with the applicant. This report can reveal patterns of risk, such as frequent accidents or severe claims, which are crucial for assessing the likelihood of future claims. Understanding the loss history helps underwriters make informed decisions regarding the policy terms, coverage options, and premium pricing, ultimately ensuring that the insurance company maintains profitability while offering appropriate risk coverage. While factors like the driver's age, total premium amount, and standard placement conditions are important in other aspects of underwriting, the direct insight provided by the loss history report is vital for evaluating the specific risk presented by the applicant's previous driving record. This makes it a critical piece of information for underwriters in determining the eligibility and terms of an auto insurance policy.