In insurance, what does the term "underwriting" refer to?

The term "underwriting" refers specifically to the process of evaluating the risk associated with insuring a potential policyholder in order to determine the terms and conditions of coverage. This includes assessing various factors such as the applicant's financial history, health status, or property valuation, depending on the type of insurance being offered. The underwriter's goal is to ensure that the insurance company takes on an acceptable level of risk while also setting appropriate premiums based on that assessment.

While calculating customer premiums can be a part of the underwriting process, the broader focus is on evaluating overall risk rather than just the financial aspects. Adjusting claims and handling customer complaints relate to post-sale activities rather than the initial evaluation conducted during underwriting. Thus, understanding the core function of underwriting as risk evaluation is essential for grasping the insurance process comprehensively.