The insurance industry's entire profit model is based on harming their customers -- underpaying claims

My impression was their profit model was collecting premiums from a very large number of customers, while only paying out a relatively small number of claims.

Adding to this comment, that's exactly why your rates go up when you get in an accident. Your "trustworthiness" has gone down and the insurance company might have to spend more on you in the long run.

So the logic is that insurance companies intentionally cause accidents for their members, in order to increase premiums and increase their costs?

That doesn't make any sense.

No. My point was that insurance company's profit model is making most of their money off people who don't have accidents and spending some of that on people who do. To recoup the loss after an accident, the insurance company will raise your rate. They're spending more on you, so they want some more from you.

Causing accidents to increase premiums would be pointless and actually cause them to lose money (premiums are almost never more than the actual cost of an accident).

Think of it this way: You have 5 people who pay $100 a month. After 3 months ($1500 profit), Alice causes an accident that costs $500. The insurance company pays for $400 of that and raises Alice's premium by $25. Now, their profit for those 3 months is $1100, but they're also now making $125 a month. That $400 insurance payout is paid for from Alice, Bob, Charlie, David, and Eve's insurance payments totaling $80/person/(3months).

Raised copays are the reason some people don't submit claims. It's a question of "Do I want to pay $300 now, or an extra $25 a month for 2 or 3 years?"

But to say that their profit model is based around causing accidents or paying as little as possible is a complete lie. Sure, insurance companies can be greedy, but their profit model is making money off people who don't have accidents. Paying lesser amounts is just an added "bonus" they get when accidents happen. It's greedy, but that's not the profit model.

Sorry, I was reading in context to tamana's comment above. I know how the industry works, I was thinking that you were trying to explain more on their point, but I see I was wrong. Thanks.