How can a "loss history" of an insured impact their insurance premiums?

A "loss history" is a record of an insured individual's past insurance claims. This record is crucial for insurers as it helps them assess risk and determine premiums for future coverage. When an individual has a history of frequent claims, insurance companies view them as higher risk. This perception arises because previous claims indicate that the insured may be more likely to file additional claims in the future.

Consequently, insurers often adjust premiums based on this assessment of risk. A history filled with multiple claims signals to the insurer that covering this individual may result in financial loss for them, prompting a premium increase to mitigate this risk. Therefore, individuals with frequent claims generally face higher premiums because insurers are accounting for the higher probability of future claims against the policy.

This approach to pricing is standard within the insurance industry as it helps maintain overall portfolio profitability for insurers while also encouraging insured individuals to manage their risk more effectively.