What does risk management involve in health insurance?

The essence of risk management in health insurance revolves around identifying, assessing, and minimizing risks to mitigate potential financial losses for the insurer and the insured. This process involves a systematic approach to understanding various health-related uncertainties and determining the most effective ways to manage them.

By identifying risks, such as the likelihood of illness or accidents, health insurance providers can assess the potential financial impact of these risks on their overall operations and the coverage they offer. The goal is to use this information to minimize risks through strategies such as underwriting practices, claims management, and setting appropriate premium rates.

Risk management is foundational to the sustainability of health insurance, as it ensures that companies maintain their financial viability while providing coverage to their customers. This approach supports better decision-making and helps in crafting policies that align with the overall objectives of risk reduction and financial stability.

Other options, while related to health insurance practices, do not encapsulate the comprehensive nature of risk management. For instance, offering discounts for healthy behavior is more about incentivizing good health, creating new insurance products addresses market needs but doesn't directly involve risk management principles, and filing claims is a process related to the delivery of benefits rather than managing risk itself.