What is "underwriting" in the context of health insurance?

Underwriting in the context of health insurance is the process of evaluating risk and determining the terms of insurance coverage. This involves assessing the health status, lifestyle, and medical history of applicants to estimate the potential costs associated with providing them coverage. Underwriters analyze various factors such as age, pre-existing conditions, occupation, and overall health to decide whether to accept the application and under what conditions, such as premiums or exclusions.

Successful underwriting is crucial for insurance companies as it helps them maintain a balanced risk pool, ensuring that the premiums collected will cover the claims made by policyholders. By accurately assessing the likelihood of claims being filed, insurers can set appropriate premiums and coverage options that reflect the risk they are assuming.