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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The fact that you got in one accident implies greater risk of future accidents. It most definitely does change the risk factors.
To use a healthcare example: By far the biggest predictor of whether or not you’ll get hospitalized this year is whether or not you got hospitalized last year.
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