Risk-based insurance premiums

Risk-based insurance premiums are costs that reflect the likelihood of an insurance claim being made. Essentially, insurers assess factors such as health, lifestyle, or property condition to determine how risky it is to insure someone or something. Higher risks, like a person with a health issue or a property in a flood-prone area, result in higher premiums because there's a greater chance the insurer will need to pay out. Conversely, lower risks qualify for lower premiums. This approach ensures that premiums more accurately match each policyholder's individual risk profile, promoting fairness and financial sustainability for insurers.