What refers to the method of distributing premium amounts based on the location of insured risks?

The correct choice is the term "Allocation of Premiums." This term clearly describes the process of assigning premium amounts to different insured risks based on various factors, including geographical location. In the insurance industry, particularly in surplus lines, it's crucial to evaluate the characteristics and hazards associated with locations where risks are situated. The allocation is essential for accurate pricing, ensuring that the premiums correspond to the level of risk presented by each location.

Other terms, while they may seem related, do not specifically capture the essence of this practice as effectively. "Premium Allocation" might refer generically to any way of dividing premium amounts without focusing on location-specific factors. "Risk Distribution" refers to broader strategies for managing and spreading risk across multiple policies or insured parties but does not pertain to the pricing structure based on geography. "Location-Based Premiums" suggests a focus on the premium amounts determined by location but lacks the precision of using the term “Allocation of Premiums” which explicitly involves the method of dividing and assigning those premiums.