Why might an insurer refuse coverage due to claim frequency?

An insurer might refuse coverage due to claim frequency because it indicates a higher likelihood of future claims. High claim frequency suggests that an applicant has a history of making numerous claims, which can be an indicator of a higher risk profile. Insurers assess risk based on statistical data, and frequent claims can lead them to conclude that the likelihood of additional claims occurring in the future is elevated. This assessment is crucial for maintaining the insurer's profitability and sustainability, as they need to balance incoming premiums with potential payouts for claims. Therefore, when an applicant's claim history shows a pattern of frequent claims, the insurer may deem it too risky to provide coverage, resulting in a refusal.