What is the main objective of underwriting in health insurance?

The main objective of underwriting in health insurance is to determine the risk of insuring an individual. Underwriting involves evaluating the health status, medical history, lifestyle choices, and other relevant factors that can affect an individual's health and potential claims. This assessment allows insurance companies to decide whether to accept or decline an application for coverage and to set appropriate premiums based on the calculated risk associated with insuring that individual.

By thoroughly analyzing these factors, insurers can predict the likelihood of future claims and manage their financial exposure effectively. An accurate underwriting process is vital for maintaining the sustainability of the insurance pool, as it helps ensure that the premiums collected will cover the expected claims and administrative costs.

While setting premiums based on demographic factors might be a component of the wider underwriting process, the primary focus remains on the individual risk assessment. Evaluating medical claims and providing customer service are important functions of an insurance company but are not directly tied to the underwriting process.