A reader wrote to an advice column in the New York Times, complaining that his insurance company had canceled his homeowner’s policy after he had filed two claims. The advice columnist observed:
“A lot of people have shared a version of [this man’s] experience … a couple of small claims … then nonrenewal.” What problem are these insurance companies attempting to avoid by canceling these people’s policies?

Why don’t the insurance companies raise the annual premiums they charge these people for their policies rather than cancel the policies?