General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
How do underwriting and claims handling differ in the insurance process?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The two functions sit on opposite sides of policy issuance. Underwriting is prospective: it gathers application information, medical evidence, and reports to select and classify risks before the contract exists. Claims handling is retrospective: after a loss, the claim department determines whether the loss falls within the policy's coverage, applies conditions and exclusions, and pays accordingly. This separation keeps risk selection and loss payment properly controlled and documented.
Why the other options are wrong
- B) The functions are reversed; underwriting selects applicants and claims pays losses.
- C) The functions are distinct in timing, purpose, and personnel, even though insurers coordinate them.
- D) Claims handling necessarily occurs after losses happen, which is after the policy is issued, not before.
Memory hook
Underwriting picks who's in the pool; claims checks who deserves the payout.