Which type of risk is represented by an individual with a history of frequent claims?

An individual with a history of frequent claims is classified as a substandard risk because their past behavior indicates a higher likelihood of future claims compared to a typical individual. Insurers assess risk based on various factors, and a history of claims suggests that the individual may engage in riskier behavior or be more susceptible to loss.

Substandard risks usually qualify for higher premiums or special underwriting terms, reflecting the increased likelihood of claims. The classification serves to help insurers manage their overall risk exposure by identifying those who may require closer scrutiny in terms of insurance pricing and policy conditions. In contrast, standard risks typically represent individuals without significant claims history, preferred risks are those with exemplary risk profiles, and above-average risks may not have a clearly defined category under standard underwriting practices.