Florida Insurance Licensing 2025 – 400 Free Practice Questions to Pass the Exam

The distinction between underwriting and claims adjusting is fundamental in the insurance industry, and option A correctly identifies the primary functions of underwriting. Underwriting is the process where insurance companies assess the risk associated with insuring an individual or entity. This includes evaluating various factors such as health, lifestyle, financial stability, and any other relevant information to determine the appropriate premium rate and eligibility for a policy. The underwriter ultimately decides whether to issue a policy and under what conditions, making this role crucial in managing the insurer's risk.

In contrast, claims adjusting pertains to the activities involved after a policyholder has made a claim. Claims adjusters investigate and evaluate the claims to determine the extent of the insurer's liability. This is quite different from underwriting, as it does not involve assessing risk to issue a new policy but rather involves processing existing claims based on policies that have already been issued.

The other options do not accurately reflect the roles of underwriting and claims adjusting. Selling policies is not a function of claims adjusting, and collecting premiums is a broader activity that involves multiple roles within the insurance process, whereas market strategies do not fall under claims adjusting but rather are part of marketing and sales functions within insurance companies.