What practice occurs when an insurance company charges higher rates based on a customer's financial position compared to others with similar lifestyles?

The practice in question refers to how insurance companies determine the rates they charge customers. When an insurance company charges higher rates based on a customer's financial position compared to others with similar lifestyles, it is engaging in discriminatory practices. In the context of insurance, discrimination occurs when companies assess risk and set premium rates differently based on factors that may not be directly related to the insurance risk itself, such as a customer's financial background, socioeconomic status, or race.

While underwriting indeed involves evaluating the risk associated with insuring an individual, it typically focuses on characteristics such as health, age, and lifestyle choices rather than solely on financial status. Risk assessment is the broader process of identifying and quantifying risks to determine potential losses and policy pricing, but it does not specifically refer to the act of adjusting rates based on financial position. Premium adjustment could imply alterations in rates due to claims history or changes in policy parameters, but it does not encapsulate the concept of charging higher rates purely based on financial standing.

Thus, the practice of charging higher rates based on financial position aligns with discrimination in insurance practices, as it highlights inconsistency and inequity in how individuals are treated based on their economic situation.