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.
What's justice got to do with anything? Insurance is a service, offered by a private entity to a private entity. You pay more in insurance than you're expected to pay for damages over a lifetime, but you get the peace of mind that comes from knowing you're not going to be bankrupt by an accident.
Sure, most industries benefit from a bit of regulation, but from that to "justice" is a long road.
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.