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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>For example, if I get car insurance and get into an accident, why should that increase my premiums.
* Because the insurance company now thinks the risk of you getting into an accident was higher than they previously thought.
* In order to make sure they still make money, they need to increase the amount they collect from you.
* Insurance companies are all about math.
* In order to make X % profits each year, they need to charge Y customers an average of $Z each month in premiums because their operating costs are $A and the amount they have to pay out in claims each month is $B and the way they predict $B is by intensely studying the causes of accidents and noting after decades of research that if a person has one accident over the course of 5 years, they are much more likely to have another accident over the next 5 years when compared to someone who had no accidents those first five years.
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