Why might an insurer choose to increase premium rates in a Conditionally Renewable policy?

An insurer may choose to increase premium rates in a Conditionally Renewable policy specifically if the risk level changes as stipulated in the policy terms. Conditionally Renewable policies allow the insurance company to renew the policy only under specific circumstances, and they often include provisions that enable the insurer to adjust rates based on changes in risk assessments.

For example, if an insured individual develops a medical condition that increases their healthcare needs or proves to be a higher risk to insure, the insurer may invoke these provisions to raise the premium. This adjustment helps the insurer maintain financial stability and manage their risk exposure effectively. The policy's language will often define the parameters under which risk assessments can lead to premium adjustments, ensuring that both the insurer and the insured are clear on the conditions that can trigger such changes.

Aligning with federal insurance guidelines, rewarding long-term members, and matching competitor pricing do not directly address the inherent structure of Conditional Renewal policies or the specific circumstances under which premium rates can be increased.