The underlying problem is that insurance companies are allowed to segment their customer base by risk. For low risk customers this is great because they get a cheap rate. For the companies it's great because they get to advertise a cheap rate and attract customers (and run really lean administratively... don't need a lot of claims handlers etc).

Things go off the rails though for customers perceived as high risk. Grouping all these folks together means a higher rate, possibly quite a bit higher.

The use of prior claim history as a risk measurement seems like a very cheap way to do underwriting. This feeds into being able to offer the cheapest offering... no need for experienced and qualified underwriters... which means a cheaper product.

The original goal of insurance, shared risked, has been somewhat eroded by this.