They're not losing money. They're taking it from everyone else.

"oh you hit a mailbox during an ice storm that we paid out $50 for after your deductible, that'll be a $400/6mo increase in premiums for the next five years"

Still doesn't seem to add up. Consider someone that causes accidents at a rate of £20k/yr, and whose insurance is £4k/y. Either they're insanely wealthy and are paying the repair costs themselves via deductibles, or the insurance companies are losing money.

You don't understand. Insurance is using that person as a pretext to jack up the rate of everyone who shares demographics with that person. Even if that person is only paying in 80% of what they cost on a 5yr basis a bunch of cheaper people are getting screwed into paying 200%. It works better for insurance company this way because at least they're getting 80% out of the guy rather than zero.

Demographic risk pooling makes sense for moderate-risk individuals (despite being ethically horrendous). But for extreme outliers like this, the insurance company has a very high expectation that they're going to lose money in the coming year if they offer a premium below 15-20k. It just doesn't make financial sense to do so. At least in the UK you're obliged to declare the last five years of accidents and claims when applying for insurance, and I'd be surprised if they're not looking out for red flags like this.