This is the exact opposite of what economics would predict. If you have a greater risk than your friend, then you will pay more because your expected risk is hi

This is the exact opposite of what economics would predict. If you have a greater risk than your friend, then you will pay more because your expected risk is higher. In perfect competition, your rate would be equal to your expected return (that is, the premiums would match the expected payout). So, if an insurer can identify that you have a greater risk than your friend, in perfect competition you would pay a higher rate. No insurer with perfect knowledge of risk would allow you to pay less than that, because they’re expected return would be negative.