What is the purpose of assessing "hazards" in insurance?

The purpose of assessing "hazards" in insurance is indeed to identify factors that increase the likelihood of loss through peril. Hazards refer to conditions or situations that can increase the chance of a loss occurring. By understanding these hazards, insurance companies can evaluate the risk associated with providing coverage and develop strategies to manage that risk effectively.

Assessing hazards allows insurers to create more accurate underwriting processes, whereby they can determine what types of policies to offer, set appropriate premium rates, and identify necessary coverage limits. This assessment also helps in implementing risk management techniques that can mitigate potential losses.

In contrast, eliminating all risks is unrealistic, as some level of risk is inherent in many situations. Increasing the likelihood of claims being successful focuses more on the claims process rather than on understanding risk, which is not the primary objective of assessing hazards. Finally, while calculating the overall cost of premiums is important for insurers, it is a downstream effect of the assessment process rather than the purpose itself. Understanding hazards leads to more informed decisions regarding premiums but is not the main aim of hazard assessment.