Which of the following illustrates an adverse underwriting decision?

An adverse underwriting decision refers to any decision made by an insurer that negatively affects the terms of coverage provided to an applicant or policyholder. This includes actions that limit the risk covered, charge more for less favorable terms, or outright deny coverage altogether.

Charging a higher rate indicates that the insurer has assessed the risk as being less favorable than average and is responding by increasing the cost of coverage. This adjustment signifies that the insurer perceives a potential risk that justifies higher premiums.

Rejecting the risk is a clear example of an adverse underwriting decision because it directly denies coverage to an applicant. This decision reflects an assessment that the risks associated with the applicant are too high to insure.

Issuing a policy with limitations is also a manifestation of an adverse decision. This means that the insurer is willing to provide coverage but with restrictions that may exclude certain risks or lower the amount of protection available.

Given that all of these actions reflect negative underwriting decisions that affect the applicant’s coverage, the correct response encompasses them collectively. Thus, recognizing that each option provided illustrates a different aspect of an adverse underwriting decision solidifies the understanding that all these choices fall under this category.