Underwriting

Underwriting is the foundation of life insurance in Australia, governed by APRA standards and ASIC disclosure requirements. The process involves detailed analysis of medical history, current health status, family medical history, occupation hazards, lifestyle activities (such as smoking, alcohol consumption, extreme sports), and financial circumstances. Australian insurers use actuarial data and medical evidence to classify applicants into risk categories. The underwriting outcome determines whether coverage is offered at standard rates, with premium loadings, with specific exclusions, or declined entirely. Under the Insurance Contracts Act 1984, insurers must act in good faith during underwriting. Recent regulatory changes include the Life Insurance Code of Practice requirements for genetic testing and mental health disclosures. Most Australian insurers complete underwriting either before policy commencement (full underwriting) or at claims time (simplified underwriting with deferred assessment). The Financial Services Council (FSC) provides industry guidelines ensuring consistent underwriting practices across insurers while maintaining individual insurer discretion based on their risk appetite and claims experience.