Underwriting is that aspect of the insurance industry business model which calls upon the company to decide the risks to be insured and to determine what premium or insurance policy fee to charge in exchange for accepting those risks. Routinely, premiums are invested in order to make sure that funds are available in the event that the holder of the insurance policy "files a claim," or seeks to invoke the terms of the insurance policy for the purpose of receiving compensation for loss on a covered item or, as in the case of health insurance, reimbursement for medical and health related services and costs covered under the terms of the policy.

The insurance industry employs a wide range of data to examine given risks and to determine with what likelihood claims will be filed in relation to those risks by holders of an insurance policy. Risks are assessed according to the principles of actuarial science.

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