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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In a different category, one year my company’s health insurance had to pay out 10% more in claims than it collected in premiums. They literally lost money on us. Guess what happened to our premiums next year.
Insurance companies are a business and they have to recoup their costs. Otherwise there’s nothing to pay claims with.
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