What constitutes unfair discrimination in insurance terms?

Unfair discrimination in insurance occurs when an insurer provides different terms of coverage to policyholders who fall within the same risk classification without a justifiable reason. The principle behind fair insurance practices is that individuals who are deemed to have similar risk profiles should receive equivalent coverage options. When different terms are offered to policyholders in the same risk category, it creates an imbalance that can lead to inequitable treatment based on arbitrary factors rather than genuine risk assessments.

In contrast, the other scenarios may involve legitimate underwriting practices based on risk factors. For instance, charging higher premiums for older policyholders may be justified due to the increased risk associated with age, and refusing coverage based on past claims might reflect a legitimate assessment of the likelihood of future claims. Limiting policy options to selected individuals could also be a reflection of regulatory or underwriting standards rather than discriminatory practices. Hence, the differentiation in coverage terms among policyholders who share the same risk classification is what constitutes unfair discrimination.