What does morbidity primarily refer to in the context of insurance?

Morbidity in the context of insurance primarily refers to the risk of disability or the prevalence of illness within a population. It encompasses the incidence of diseases or conditions that can lead individuals to experience a decline in health and functioning. This concept is crucial for health and accident insurance, as insurers need to assess the potential costs associated with policyholders becoming ill or disabled, which can result in a need for medical care, treatment, or benefits.

By understanding morbidity, insurance companies can better evaluate and price their products, ensuring they maintain adequate reserves to cover claims related to health-related concerns. This distinct focus on disability and illness sets morbidity apart from other risks, such as mortality, which involves the risk of death.