What is meant by 'underwriting' in the insurance industry?

Underwriting in the insurance industry refers to the evaluation of risk to determine the appropriate premium for an insurance policy. This process involves assessing various factors related to the applicant, such as health, lifestyle, driving history, and any other criteria relevant to the type of insurance being offered. The underwriter uses this information to gauge the likelihood of a claim being made and decides on the terms and pricing of the insurance coverage.

By determining the risk level associated with insuring an individual or entity, underwriters can ensure that the premiums charged accurately reflect the potential exposure to loss. This function is crucial because it helps maintain the financial stability of the insurance provider and ensures fairness in pricing for consumers.

The other options, while related to the insurance process, do not capture the essence of underwriting. Preparing claims for payment focuses on the post-sale process, while adjusting claims relates to the resolution of claims after they are submitted. Additionally, marketing strategies pertain to promoting insurance products rather than assessing the risk associated with coverage.