The more policyholders file claims, the more pressure there is for insurance companies to raise the price of premiums. Insurance companies cope with such pressure with several tactics. They can raise the premiums of those who file claims, and they can raise the premiums of those who pose higher-than-average risk, like teenage drivers. They can also refuse to insure those who could file particularly expensive claims, such as refusing to offer flood insurance to those who live in oceanside communities, especially if they’re below sea level, like parts of New Orleans. Such tactics aim at keeping the average premium affordable. However, the standard practices that the insurance business has used to keep the price of premiums affordable have been disallowed in one sector of the industry: health insurance. Both state and federal governments have instituted the twin policies of “guaranteed issue” and “community rating” in health insurance. The former...(Read Full Article)