Well, the idea is that the market takes care of lies. If a different insurer can correctly predict that a lower premium is sufficient to cover your risk, they s

Well, the idea is that the market takes care of lies. If a different insurer can correctly predict that a lower premium is sufficient to cover your risk, they should try to sell their product to you at a lower price to gain you as a customer and thus increase their revenue. Now, that does not mean that it would be fair. Insurance doesn't care about fairness. They balance premiums with modeled risk, not with actual risk.