California Insurance License Exam Practice Test Practice Question
The process by which an insurer decides whether to issue requested insurance is called
Correct Answer: B
Rationale: Underwriting is the process insurers use to evaluate the risk of insuring a person or asset, determining whether to issue the requested insurance. This involves assessing various factors, such as health history or property conditions, to ensure that the risk is manageable.
Adverse selection refers to the tendency of higher-risk individuals to seek insurance more often, which can lead to imbalances in the insurance pool. Application is simply the submission of information by the potential insured, not the decision-making process itself. Competition involves multiple insurers vying for customers but does not pertain to the evaluation of individual risks.
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