There are a number of jokes about underwriters; a favorite is that they cut out your heart when you become one. Another is that the only answer an agent ever receives is a resounding No. Conversely, many underwriting departments have Walls of Shame where underwriters post pictures from inspections of less than eligible properties. There are pictures of houses with six-inch maple trees growing in the gutters, houses with snow on the roof for an application that was submitted in June (we still need to see what the roof looks like) and the ever so popular picture of the large dog growling at the inspector through the windshield of the inspector's car. The truth, of course, is somewhere in between.
The function of an underwriter is to review the applications and ensure that the property, vehicles, or other risk submitted for coverage meets the company's guidelines and eligibility requirements. With auto policies, the underwriters look at driving records, CLUE reports, the ratio of drivers to vehicles, types of vehicles, etc. With property policies the year of construction, distance from the fire station, type of construction, use of the building, condition of the building and other variables are reviewed. There's a reason applications have so many questions, and why underwriters get annoyed when an application is not complete. Without complete information, they can't correctly assess the risk.
By carefully reviewing risks and ensuring eligibility, an underwriter helps maintain the company's loss ratio and profitability. Poor risks affect both the agent's book and the carrier's book negatively. While a few less than stellar risks are ok, if an agent is submitting a large number of less than desired risks it will eventually affect his and the company's profitability. This is why underwriters often say no.
Underwriters do have some leeway and can make exceptions. So when would an underwriter make an exception? Exceptions are made for agents with good loss ratios that the underwriter knows will offset the lesser risk with a better risk as well. The auto application with a less than stellar driving record may be tied to an excellent home and umbrella policy with a profitable commercial account. By not making exceptions for risks that are subpar, the underwriter is helping the agent improve his loss ratio and protecting the company. If you're regularly getting no answers from underwriting, you should probably review the types of risks you're submitting.
It also depends on the nature of the risk; is the risk well outside of standards, or just barely outside of standards? That makes a difference. An unfenced pool will probably never get an exception. However, a risk with a loss that is just about at the three-year mark is an easy exception to allow. An unfenced pool, even in a remote area where the residents don't have children and grandchildren don't visit is still going to get a no. The risk of someone turning up and falling in and drowning is too great, however unlikely you feel it may be. Pool alarms are not enough to prevent a drowning accident.
If something can be corrected or modified in thirty or sixty days, that might get an exception if the agent is sure the insured will follow through. Adding railings to porch steps perhaps or fixing loose bricks on the steps are easy actions that can remedy a situation for an otherwise acceptable dwelling. However if the inspection photos show caution tape around the dwelling, that's going to be a no. It shows that the agent didn't do his due diligence and look at the risk before submitting it.
Many underwriters have pets, love animals, are dog friendly and know that the Centers for Disease Control (CDC) and American Veterinary Medical Association (AVMA) are against breed specific discrimination. A former coworker had a particularly ferocious Chihuahua that the vet had to muzzle just to trim the dog's nails.
Some companies still maintain bad dog lists, and refuse to write certain breeds. The problem isn't the dogs so much as the owners, the lack of training of the dog, and other people's ignorance in how to behave around a dog. One company I worked for had an insured with a mother Doberman with puppies. Mom and puppies were happy in their doggie pen. Unfortunately, the insured's daughter came over with a grandchild, and while neither the insured nor the daughter was paying attention, the child tried to climb into the pen to see the puppies. The claim exceeded limits on the homeowners policy and went into the umbrella policy. The dog's behavior was very reasonable; the mistake of the adults resulted in significant trauma, pain, and suffering to the injured child. A sympathetic underwriter with a house full of dogs can't make an exception for animals on the bad dog list, even if the owner can prove that the Cuddles the Rottweiler passed obedience school with high marks and that Cuddles hides behind the sofa when the doorbell rings. Underwriters sympathize, but sometimes there are just no exceptions.
Most underwriters want to work with agents to help them place good risks. They will provide guidance on the proper endorsement to use, how to best provide coverage for a given situation, and explain why something is not a good risk. A good underwriter will work with agents to write good business. Likewise, a good agent will work with her underwriter and be familiar with the company guidelines so that neither the agent nor underwriter is wasting time dealing with ineligible risks. Underwriters are people too, and sometimes it pains them to say no just as much as it hurts to hear no; sometimes there is just no room for an exception, even for Cuddles.