Underwrite can refer to one of many different kinds of financial risk taking. Broadly, underwrite means agreeing to some form of financial investment with the possibility of profits or losses. A few examples of underwriting include loans, insurance, and securities. For loans, investors take the risk that their money will never be paid back because they hope to receive that money plus interest. Insurance companies underwrite the risk that insured individuals will be harmed because they hope the overall amount of damages will be less than the amount individuals pay for insurance. Investors invest in different forms of securities such as stocks and bonds because their price may rise and lead to a profit.
[Last updated in November of 2021 by the Wex Definitions Team]