What term describes the amount of business an insurer is able to write based on a comparison of written premiums to policyholders' surplus?

The term that describes the amount of business an insurer is able to write based on a comparison of written premiums to policyholders' surplus is referred to as capacity. This concept is essential in insurance as it reflects an insurer's financial strength and ability to underwrite policies. Capacity is determined by the amount of surplus the company has to support its business activities, ensuring that it can meet policyholder claims even after accounting for the premiums it has written.

In this context, the relationship between written premiums and policyholders' surplus provides insight into how much risk the insurer can assume while maintaining financial stability. A higher capacity means that an insurer can write more business and take on greater risks, while a lower capacity may indicate potential limitations on the volume of policies they can issue.

The other terms in the options serve different functions within the insurance industry. Coverage limit refers to the maximum amount an insurer will pay for a covered loss, risk assessment involves evaluating the risk associated with insuring an individual or business, and policy retention pertains to the percentage of policyholders that renew their policies with the same insurer. None of these terms directly pertain to the insurer's ability to write new business in relation to their surplus.