Define "underwriting" in the context of insurance.

Underwriting in the context of insurance refers to the process of evaluating risk and determining the terms and cost of insurance coverage. This involves assessing the likelihood of a claim being made and establishing appropriate premium amounts based on various factors such as the applicant's health, lifestyle, type of coverage needed, and the overall risk associated with insuring that individual or entity.

The underwriting process is crucial as it helps insurance companies manage risk effectively, ensuring that they can remain solvent while providing coverage. This evaluation leads to informed decisions about policy issuance, including what terms should be applied, what premium should be charged, and whether or not to accept the application.

In contrast, the other options focus on different aspects of the insurance process. Filing a claim is a separate procedure that occurs after coverage is in place, assessing customer satisfaction is about evaluating experiences post-coverage, and marketing strategies involve promoting insurance products to potential customers. None of these elements address the core function of underwriting, which is foundational to the insurance industry’s operation.