The process of evaluating and assuming financial risk, whether by assessing loan applications, pricing insurance policies, or guaranteeing the sale of securities. Underwriters determine terms, pricing, and whether to accept the risk.
From the practice at Lloyd's of London where individuals would literally write their names under the risk description to indicate their willingness to accept a portion of the insurance liability. This 'under-writing' became the standard term for risk assessment and assumption.
Underwriting began with ship insurers at Lloyd's coffee house literally writing their names under the ship's details - hence 'underwriting'! Modern underwriters are professional risk detectives who use data and algorithms to predict the future, essentially betting on whether you'll pay back loans or file insurance claims.
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