What is the role of substandard ratings in field underwriting?

• A. To provide a lower premium when risk is below average.
• B. To apply a higher premium or surcharge commensurate with elevated risk.
• C. To bypass medical underwriting.
• D. To exclude coverage altogether.

Answer: (B)

Substandard ratings are used to price higher risk appropriately. In field underwriting, the agent flags factors that raise an applicant’s risk above the standard level, such as health issues, age, or risky habits. When risk is elevated, the insurer assigns a substandard rating that increases the premium or adds a surcharge to reflect the greater likelihood of a claim. This keeps pricing fair and ensures the policy remains insurable rather than being offered at a standard price to someone whose risk profile warrants more cost. Substandard ratings still involve underwriting—medical information and other factors inform the rating—and they don’t automatically exclude coverage; the policy can be issued with the higher premium or with specific riders as needed.