What is the purpose of loss history data in underwriting?

• A. To verify occupancy type.
• B. To review past losses and claims.
• C. To evaluate creditworthiness.
• D. To determine vehicle speed.

Answer: (B)

Loss history data helps underwriters assess risk by examining an applicant’s or insured’s past losses and claims. By looking at how often claims occurred, how large they were, and what kinds of losses happened, the underwriter can estimate future claim frequency and severity. This information guides premium pricing and coverage decisions, such as whether to accept the risk, require higher deductibles, adjust limits, or modify terms. It also helps identify patterns that might indicate ongoing risk or potential fraud.

Other factors like occupancy type, credit considerations, or unrelated measurements aren’t what loss history data directly evaluates; loss history focuses specifically on the insured’s loss experience.