Texas Property and Casualty License 2025 – 400 Free Practice Questions to Pass the Exam

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What does the term "underwriting" refer to in the insurance industry?

The process of acquiring new clients

The assessment of risks to determine insurance premiums and coverage

The term "underwriting" in the insurance industry specifically refers to the assessment of risks to determine insurance premiums and coverage. Underwriters evaluate various factors related to the applicant's risk profile, including health, property conditions, and previous claims history, among others. This comprehensive evaluation allows insurers to decide whether to provide coverage and under what terms, including how much to charge for premiums.

This is a critical function of insurance, as it helps ensure that the insurer remains financially stable while also offering appropriate protection to policyholders. Underwriting determines the risk that the insurer is willing to take on and ensures that the pricing of policies reflects that risk accurately.

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The marketing strategies used by insurers

The process of settling claims

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