What is the process used by insurers to determine policy terms and conditions?

The process used by insurers to determine policy terms and conditions is known as underwriting. During underwriting, insurers assess the risks associated with providing coverage to an applicant. This process involves evaluating various factors, such as the applicant's history, the type of insurance requested, and any specific characteristics related to the insured property or individual.

Underwriters utilize a variety of data sources and risk assessment tools to establish the likelihood of a claim being made, which directly influences the terms of the policy, including coverage limits and premiums. The primary goal of underwriting is to ensure that the insurer can adequately manage risk while providing fair and competitive rates to policyholders.

Claim assessment, on the other hand, occurs after an incident has taken place, when a claim is submitted for review. Risk evaluation is a broader term that might encompass various aspects of analyzing potential risks but does not specifically represent the structured process used before a policy is issued. Policy administration refers to the ongoing management of the insurance policy after it has been written, including billing, renewals, and customer service, rather than the initial determination of its terms and conditions.