united-states international insurance health-insurance
Possibly a stupid question, but do insurance companies HAVE to have somebody as a customer?
<p>Let's say Unlucky Joe is a very accident-prone young man. He keeps getting into costly accidents all the time, but it can never be proved that he does it by mistake, and it doesn't benefit him economically. However, his insurance company keeps having to pay the costs for his accidents.</p>

<p>So they increase his monthly cost. But can they do this infinitely, to the point where Unlucky Joe simply cannot afford being insured? Or is that against the law somehow? I mean, if he really does have such bad luck, he truly needs the insurance, but at the same time, the insurance company would never accept having a customer who literally <em>costs</em> them more than they get from him?</p>

<p>Are they obliged to keep him as a customer, with a reasonable maximum ceiling for the "premium" (I think that's what it's called)? Or will poor Joe find himself unable to get insured and thus get heavily into debt and lose his home?</p>

<p>PS: Unlucky Joe could also be Unfortunate Sue, who also has bad luck but in her case, she keeps getting costly diseases and basically lives in the hospital.</p>

<p>The general answer in the US is that insurance is a state-regulated business, so insurance companies cannot just do whatever they want. Here is a central <a href="https://www.insurance.wa.gov/laws-rules" rel="nofollow noreferrer">resource for Washington state</a>. In general, if a person is "risky", the carrier can raise premium cost, and eventually can decide that the risk is too high. E.g. I cannot get earthquake insurance because of the risk (well, from my regular carrier, I haven't checked with specialty carriers). Also, nobody offer private oil tank insurance (the state runs a program). The extent to which a carrier has discretion to say "you are too risky" depends on specific laws (via regulations).</p>

<p>For health insurance, in Washington, a carrier requests a rate, which is <a href="https://www.insurance.wa.gov/how-we-review-health-rates" rel="nofollow noreferrer">reviewed by the insurance commissioner</a>. A company is limited to 1 annual rate change, unless new benefits are mandated by law. The commissioner looks at the economic arguments and either approves or disapproves the rate. The scheme used in Washington does not admit a lot of risk-factor variables, just age, where you live, and whether you smoke. Perhaps there is a jurisdiction where heroin addicts or race-car drivers can be charged a higher rate. The underlying theory is that you sum up all of the expenses, and assign higher premiums to people with low risk so that unlucky customers don't have to individually pay. This is a consequence of ACA, so it's not necessarily applicable to house or car insurance.</p>
