What is the process of evaluating risk and determining the terms and price of coverage called?

The process of evaluating risk and determining the terms and price of coverage is known as underwriting. During underwriting, insurers assess the potential risks associated with insuring an individual or entity. This involves analyzing various factors, such as the applicant's health, lifestyle, past claims history, and other relevant information to gauge the likelihood of a claim being made.

By analyzing this information, underwriters can establish appropriate premiums that reflect the level of risk. They also set the conditions under which coverage would be provided, ensuring that the insurance company can maintain profitability while offering competitive rates. This crucial function helps in balancing the need for coverage with financial viability for the insurer.

Other processes mentioned, such as liability assessment, focus more specifically on analyzing the potential legal liabilities of a situation without the broader context of underwriting, which encompasses all risk factors for coverage. Risk management refers to the overall strategy for handling risk, and premium calculation is a component of underwriting rather than the entire process.