They price their products based on risk. That's what insurance is.
If you have a lot of tickets you are likely to wreck your car. You should pay more than a safe driver pays for auto insurance. You are riskier.
If you have bad health, you have to pay more for health insurance and life insurance. You are more likely to be making claims on the insurance sooner. To not charge you more would require charging more to healthy people.
Health insurance is changing from true insurance to an entitlement program. This will make it less costly than it is now for unhealthy people but it will raise rates for all the healthier and younger ones. It should be a good change but time will tell.
But to answer your question....would YOU want to be the insurance company and charge a 16-year old male driver with three tickets the same rate as the 45-year old woman with no tickets.
If you answer yes, you should open an insurance company. You will get a lot of young customers before you go broke.
Adding to what Scott said, insurance companies are just like all other financial institutions in that they try to operate at a profit. Forcing an insurance company to provide benefits to everyone regardless of their individual risk profile is like demanding that banks loan money to everyone under the same terms and conditions regardless of the individual's credit worthiness.
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
I think Discriminate depends on how you mean it. In cases of offering a product, a carrier cannot discriminate by race. A carrier cannot discriminate beyond what the state they are doing business in allows. In some states this may mean unisex pricing or outlawing "red lining" in others. Any insurance plan MUST be approved by each state's department of insurance and subject to a review prior to allowing the product to be sold. An insurance carrier may be able to create separate classes within a type of policy by showing the statistical probabilities behind doing so. Women tend to live longer than men, This can be shown statistically so separate pricing can discriminate between the two sexes. This could be applied to smoking, weight, year of birth, health conditions and so on..So if an insurance company can show a statistical difference based on gathered information, they can "discriminate" that way "if" the state allows it. What they can't do is take two people who are the same in every way and deny coverage for A while taking B into the plan.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
Imagine that I own a brand new Corvette and you own a five year old Fiat. Would you want to pay the same amount for auto insurance as me? What if I only drove my car on Sundays and only went 20 miles and always had my mother in the seat with me, while you drove 700 miles a week on foggy dangerous roads. Should we pay the same amount? But my mother is a previous race car driver and has three moving violations in the past 30 days. You have a perfect driving record. Should we pay the same amount? I don’t call that discrimination, I call that adjusting the risk. The insurance company calls it underwriting.
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If you have a lot of tickets you are likely to wreck your car. You should pay more than a safe driver pays for auto insurance. You are riskier.
If you have bad health, you have to pay more for health insurance and life insurance. You are more likely to be making claims on the insurance sooner. To not charge you more would require charging more to healthy people.
Health insurance is changing from true insurance to an entitlement program. This will make it less costly than it is now for unhealthy people but it will raise rates for all the healthier and younger ones. It should be a good change but time will tell.
But to answer your question....would YOU want to be the insurance company and charge a 16-year old male driver with three tickets the same rate as the 45-year old woman with no tickets.
If you answer yes, you should open an insurance company. You will get a lot of young customers before you go broke.