What process do insurers use to decide whether a policy should be issued and on what terms and conditions?

What process do insurers use to decide whether a policy should be issued and on what terms and conditions?

• A. Underwriting
• B. Endorsement
• C. Audit
• D. Rating

Answer: (A)

Underwriting is the process insurers use to assess risk and decide whether to issue a policy and on what terms. It considers the applicant or property risk, determines eligibility, and sets coverage, deductibles, exclusions, and the premium to reflect that risk. Endorsements are changes after a policy is issued, audits review exposures or verify information, and rating relates to how the premium is calculated—often after underwriting has established the risk and terms.

Underwriting is the process insurers use to assess risk and decide whether to issue a policy and on what terms. It considers the applicant or property risk, determines eligibility, and sets coverage, deductibles, exclusions, and the premium to reflect that risk. Endorsements are changes after a policy is issued, audits review exposures or verify information, and rating relates to how the premium is calculated—often after underwriting has established the risk and terms.