What is the purpose of underwriting in health insurance?

The purpose of underwriting in health insurance is primarily to assess and determine risk. Underwriting is the process through which insurance companies evaluate the likelihood that an applicant will experience a loss, such as incurring healthcare costs, based on factors such as their medical history, age, lifestyle, and other relevant criteria. This evaluation helps insurers decide whether to offer coverage, what terms to set, and how much to charge for premiums. By understanding the risk associated with each applicant, insurance companies can appropriately price their products and manage their overall risk exposure.

The other options, while important in the context of health insurance, do not align with the primary function of underwriting. Evaluating patient satisfaction focuses on post-coverage experiences and outcomes rather than initial risk assessment. Implementing preventive measures pertains to health management strategies to reduce overall healthcare costs, which is distinct from the underwriting role. Negotiating provider contracts involves establishing agreements with healthcare providers to determine payments and services, a process separate from assessing individual coverage risks.