Which insurance principle outlines that premiums will be adjusted during a policy term based on risk assessment?

The principle that outlines that premiums will be adjusted during a policy term based on risk assessment is referred to as underwriting. Underwriting is a critical process in the insurance industry where insurers assess the risk associated with insuring an individual or entity. This process involves evaluating various factors, such as the applicant's history, behavior, and other relevant data to determine the likelihood of a claim being made.

In underwriting, insurers may decide to modify the premium during the policy term if new information comes to light that alters the assessed risk. For example, if an insured property has increased in risk due to changes in the local area or if the policyholder's behavior indicates a higher risk profile, the insurer may decide to raise the premium accordingly. This principle is essential because it allows insurers to maintain financial viability and adjust to changing risk levels over time.