What is the function of assessing policyholders to determine their insurance eligibility and pricing called?

The function of assessing policyholders to determine their insurance eligibility and pricing is known as underwriting. Underwriting involves evaluating the risk associated with an individual or group applying for insurance coverage. This process includes analyzing various factors such as the applicant's health, lifestyle, occupation, and past insurance claims to set appropriate premiums and approve coverage.

By thoroughly assessing these risks, underwriters aim to ensure that the insurance company can provide coverage effectively while maintaining financial stability. The underwriting process helps to balance the insurance pool by selecting risks that are manageable and profitable for the insurer.

In contrast, adverse selection refers to a situation where those at higher risk are more likely to seek insurance coverage, which can lead to financial strain on insurance companies if not properly managed through underwriting. Actuarial science involves statistical methods to evaluate risk and determine pricing but is more focused on the mathematical aspects rather than the individual evaluation of applicants. Risk management encompasses a broader strategy to identify and mitigate risks, rather than the specific process of determining insurance eligibility and pricing.