[fabsroman]

If you try to figure out how insurance companies determine their premiums, you will go insane. Billy is right about car insurance and auto insurance for the most part, but there are other things involved and there is no way I can cover them all. For instance, some car insurance companies look at your credit rating, assuming that a person with a good credit rating will be a more responsible driver than somebody with a bad credit rating. Home owner's insurance looks at how many other claims you have made. The list of factors goes on and on.

With health insurance, they look at your age, any risk factors that you currently have (e.g., smoking, drinking, prior conditions), they look at where you live, the general cost of care where you live, etc. The list goes on and on. Of course, insurance companies are regulated by the state too. For instance, an auto insurer in Maryland cannot look any further back on a potential insureds driving record than 3 years. Also, Maryland has to approve rate increase plans for moving violations and accidents and there has to be a correlation between those rates.

Just thinking about all this is giving me a headache. The only time I had to deal with this was on an insurance case, and at least I was getting paid for it, so my head didn't hurt quite as much.