Kenneth R. Underwood, 70, who was manager of the Insurance Rating Bureau of D.C. from 1956 until his retirement in 1973, died of pneumonia Saturday at Suburban Hospital in Bethesdsa.

Mr. Underwood joined the bureau in 1954 as an assistant manager. The bureau, a nonprofit, industry-supported organization, was set up by act of Congress to determine fire insurance rates in the District under guidelines issued by the D.C. supperintendent of insurance. The bureau represents most of the major insurance companies doing business in the city.

As a result of condition following the civil unrest of 1968, Mr. Underwood helped establish the D.C. Property Insurance facility, alos known as the FAIR Plan (Fair Access to Insurance Requirements), a group of fire insurance underwriters formed to insure high-risk property.

Mr. Underwood began his career in 1937 with the New York Fire Insurance Rating Organization.

He was born in New York, N.Y., and graduated from New York University, where he was captain of the tennis team.

He served with the American Red Cross during World War II.

In 1959, he was named associate member of the year by the Metropolitan Washington Association of Independent Insurance Agents, of which he was a member. He also was a member of the Blue Goose Insurance Fraternity and a past member of the Conference of Special Risk Underwriters of the Insurance Managers Association.

He lived in Bethesda and was a member of Our Lady of Lourdes Catholic Church and its parish council. He also was a past president of the Lourdes Senior Adult Group and a member of the Knights of Columbus.

Survivors include a brother, Dr. Edward B., of Kohului, Maui, Hawaii. CAPTION: Picture, KENNETH R. UNDERWOOD