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The process by which insurers assess the risk of potential clients and decide on the terms of insurance. It's crucial as it helps in determining the premiums and coverage limits to balance risk and profitability.

A discipline that applies mathematical and statistical methods to assess risk in the insurance and finance industries. It is essential for setting premiums and reserves, ensuring that insurers remain solvent and able to pay claims.

This refers to the amount that the insured must pay out-of-pocket before the insurance company pays a claim. Deductibles are important as they discourage minor claims and share the risk between the insurer and the insured.

The amount of money charged by an insurer for coverage. The premium is significant because it is the main source of revenue for insurance companies and helps determine the level of risk they are willing to accept.

The process where an insurance company purchases insurance for itself to limit the total loss it might suffer from a disaster or series of claims. This is important to spread risk and protect insurers from catastrophic events.

A principle based on restoring the insured to their financial position prior to a loss. Indemnity is important in insurance because it prevents the insured from profiting from a claim, thus reducing the risk of fraudulent claims.

Occurs when the behavior of the insured changes as a result of having insurance. Moral hazard is important since it can lead to more frequent or severe losses, and insurers must account for this when pricing policies and setting terms.

The concept of spreading risk across a large number of policyholders. Risk pooling is essential because it allows insurers to predict loss more accurately and ensure that they have sufficient funds to pay out claims.

Specific conditions or circumstances for which the insurance policy will not provide coverage. Exclusions are important because they allow insurers to limit their risk exposure and prevent covering perils that are too costly or difficult to insure.

The process of identifying and evaluating the risks faced by an individual or organization. Risk assessment is important in insurance as it determines the probability and potential impact of events, influencing premiums and coverage.

An individual or entity that owns an insurance policy. The policyholder is significant because they are the one who has the rights to the benefits of the policy, and they provide the premium income to the insurer.

An add-on to a basic insurance policy that provides additional benefits or coverage at an extra cost. Riders are important as they allow policyholders to customize their policies to fit their specific needs.

The process of investigating a claim to determine an insurer’s liability under a policy. Claims adjustment is critical as it influences the insurer's decision on the settlement and ensures that each claim is fairly evaluated.

The maximum amount an insurer will pay for all accumulated claims within a policy period. Aggregate limits are important because they protect insurers from excessive losses and help maintain their financial stability.