Final answer:
Some types of claims may be isolated from average cost calculations in insurance to accurately reflect the risk group and charge higher premiums to those with higher expected losses.
Step-by-step explanation:
Some types of claims may be isolated from average cost calculations in insurance because different individuals or groups may have different levels of risk. Insurance companies use actuarial principles to determine the premiums that individuals or groups should pay based on their expected losses. By isolating certain types of claims, the insurance company can charge higher premiums to those individuals or groups with higher expected losses. This helps ensure that the level of insurance premiums accurately reflects the risk group, but it may also result in higher costs for certain individuals or groups.