Disclosure: I do this for a living.
Say for every 100 women drivers there are 4 accidents and for every 100 men there are 5. Men will pay 25% more as a result. Your expected accidents per year are still only .05 though. So if your actual accidents is 1 (or more), that means you're potentially riskier than the average man.
It may be totally random, therefore your rate doesnt increase 20x. Additionally, the data shows that folks who've been in an accident have a much higher probability of having another one.
I hear that, but that still doesn't explain why it's not based solely on individuals. He had a great point, certain ethnicities are way more accident prone, why not charge them a higher base rate?
Base rate is for no accidents.
Exactly. If you are taking that assumption, the base rate should be the same until said accident(s) happen. If none do, why should I have lived my life paying more when I was incident free? I may agree that if both a man and a woman were in an accident, his rates should increase more than hers, but from a clean slate, both should start at 0.