The term 'underwriting' has several meanings. In the broadest sense, it refers to the entire transaction of the insurance business. Thus, insurance companies are referred to as 'underwriters'. In a restricted sense 'underwriting' is the process of accepting or rejecting risks. If a risk is acceptable, underwriting is further concerned with the fixing of the rate of premium and the other terms and conditions of the insurance contract. In this sense, the term 'underwriter' is used to indicate the man who conducts the technical side of the business, i.e. that part of the insurance function which deals with the acceptance of risks as distinct from other function as a development of business.

Underwriting, therefore, deals with principles and practices concerning the acceptance or rejection of risks, fixing of rates and terms.