Insurance companies base their decisions on whom to insure on the law of averages and the law of large numbers. This means that when a certain number of claims have been filed within a particular area or age group, the company may classify that area or group as high-risk. The company generally terminates insurance for everyone in that area or group, regardless of their individual records. Policyholders are informed through written notices that their insurance will not be renewed.
If such a termination happens to you, you can appeal the decision either directly to the company president or to the state regulatory agency. Be prepared to show evidence of your good record and the number of claims you have actually filed. Notice of non renewal letter:
1800 Fortuna Drive
Frankfort, KY 40612
July 16, 2012
Ms. Cynthia B. Lewis
Mutual Insurance Company
New York, NY 10010
RE: Policy No. 774-56-8993
Dear Ms. Lewis:
I am writing to protest the arbitrary cancellation of my health insurance policy by Mutual Insurance Company. On June 24 I received notice from your company that my major medical insurance policy would not be renewed. The reason was listed as “unusually high number of claims.”
I learned from my agent that the company has classified my age group (5560) as a high-risk group and has arbitrarily terminated insurance for everyone in that group. In the ten years I have had my policy, I have made only two claims, both for minor outpatient surgery. Otherwise, I have remained in excellent health.
I believe that rather than cancelling insurance across the board, Mutual Insurance should review individual policy holders to determine which ones are not making an excessive number of claims. Over the past ten years, I have always paid my premiums promptly, and never filed for any treatments that were not legitimately covered by the policy.
At my age, getting new insurance at the same price will be difficult. I am sure that once the facts in my case are made clear, you will renew my policy on the present terms.