What might trigger a "premium rate increase"?

Rising claims costs or underwriting reviews are significant factors that can trigger a premium rate increase. When the costs associated with claims begin to rise, it can indicate that the insurer is facing higher expenses and a greater risk of payouts. This situation might arise from various factors such as increased medical costs, a spike in claims due to certain conditions, or changes in the population being insured.

Additionally, underwriting reviews assess the risk profiles of policyholders and the insurer’s overall risk exposure. If reviews reveal that claims are trending upwards or that certain risk factors are more prevalent than previously assessed, insurers may need to adjust their premium rates to maintain financial stability. Such increases help ensure that the insurer can cover potential future claims and remain solvent while continuing to provide policy coverage.

In contrast, options related to decreased claims experience or lowering eligibility criteria would generally imply reduced risk for the insurer, which might not necessitate a rate increase. Reducing coverage could also lead to lower premiums as the insurer takes on less risk.