28. The process by which an insurer decides whether to issue requested insurance is called
Answer: B
Underwriting
Underwriting is the process by which an insurer decides whether to issue requested insurance. This involves evaluating the risk presented by the applicant to determine the terms and conditions of the insurance policy.
A) adverse selection.
Adverse selection refers to a situation where individuals with higher risks are more likely to seek insurance, which can lead to an imbalance in the risk pool. While it is a relevant concept in insurance, it does not describe the decision-making process used by insurers to evaluate applications.
B) underwriting.
Underwriting is accurately defined as the process involved in assessing the risk of insuring a person or asset and deciding the terms of coverage. This includes reviewing the application, evaluating risk factors, and determining the appropriate premium, making it the correct answer.
C) application.
The application is a form filled out by the prospective insured to provide necessary information to the insurer. While it is part of the insurance process, it does not represent the decision-making process itself, which is what the question is asking about.
D) competition.
Competition in the insurance market refers to the rivalry among insurers to attract clients, often leading to better rates and services. However, it does not pertain to the internal process of evaluating and deciding on insurance applications.
Conclusion
Underwriting is the definitive process that insurers use to assess risk and determine whether to issue insurance. The other options, while relevant to the broader context of insurance, do not accurately describe the specific process of evaluating applications, making underwriting the correct choice.