For example, if I get car insurance and get into an accident, why should that increase my premiums. I’m insuring against that risk, so the fact that I had an accident surely shouldn’t change by risk factors.
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They won’t increase the premiums until you finish out your term (or move, or buy a new car). That’s because, at the beginning of the term (usually one year) they did a risk analysis of you, and assigned you a premium based on that. They then usually slowly increase the premium on you because people are usually too lazy to shop around – but if you did shop around, you would find, after not being in accident for a longer period of time, you would be offered slightly lower premiums that would continue to drop the longer you go without an accident.
However, you got in an accident, so when your term ends and your premiums are recalculated, they will take into account the fact that you were in an accident. So, the next policy that gets written will have an increased premium to cover the odds that you’re in an accident again (greater, since people who have been in accidents are more likely to be in one again).
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