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higher premiums for higher risk categories (through credit score use) ultimately results in higher premiums for the lower risk insured (because higher risk clients seek other insurers to avoid higher premiums) is flawed IMO. Insurers structure rates so that every risk category generates a profit margin. Therefore, the loss of customers in higher risk categories does not threaten the profitability of carrying lower risk individuals, and higher premiums for those who are lower risks are not inevitable just because higher risk persons exit. If an insurance company can't make money carrying higher risk clients, they shouldn't (and probably won't) cover them anyway. IMO, using one division, product line, model, risk category, etc., to subsidize another is a flawed business model, and nearly every company avoids it, except on a short term or transitional basis, as a matter of standard operating procedure.
 Chance favors the informed |
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