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

Underwriting in the insurance industry refers specifically to the evaluation process of risk associated with insuring a person or property. This process involves assessing various factors such as the applicant's health, lifestyle, and historical data, as well as the characteristics of the property in question. The underwriter determines the level of risk involved and makes decisions on whether to accept or decline the application for insurance coverage, as well as the terms and pricing of the policy if approved.

This evaluation is crucial because it helps the insurance company to protect itself financially by ensuring that policies are issued under conditions that align with the risk profile of the applicant. Understanding the risks involved allows insurers to set appropriate premiums to cover potential future claims while maintaining profitability. In this way, underwriting is foundational to the sustainability of the insurance business.

The other options provided do not encompass the primary role that underwriting plays. Marketing insurance products focuses on promoting and selling policies rather than evaluating risk. The management of claims post-accident is a separate aspect of insurance focused on handling payouts and resolving claims rather than the initial risk assessment. Lastly, the creation of new insurance policies is about product development and does not involve evaluating the risks of existing individuals or properties seeking coverage.