In insurance, what is the main purpose of underwriting?

The main purpose of underwriting in insurance is to assess risk. Underwriting involves evaluating the potential risk associated with insuring a person or entity and deciding the terms and conditions of coverage. This process is crucial because it helps insurers determine how likely it is that a claim will occur based on various factors, such as the applicant's health history, lifestyle choices, and other relevant information. By accurately assessing risk, underwriters can help ensure that premiums are appropriately matched to the level of risk, ultimately maintaining the financial stability of the insurance company while providing coverage for policyholders.

While investigating claims, selling policies, and handling customer service are all important functions within the insurance industry, they do not encapsulate the fundamental role of underwriting. Investigating claims relates to ensuring that when a claim is made, it is valid and should be paid. Selling policies is about marketing and providing insurance products to consumers. Customer service encompasses assisting clients with inquiries and support throughout their relationship with the insurer. These functions enhance the customer experience but are secondary to the critical task of risk assessment performed by underwriters.