My former neighbor worked in the industry. As he put it, they KNOW about how much statistically they will have to pay out in a given year. That's budgeted. What they want to avoid are people who file multiple small claims that they probably should have paid out of pocket.
At the time he had canceled coverage for a homeowner's policy that had 4 claims in 2 years totaling about $5,000. That was the only policy that person had with them and they had been with them 5 years.
He added, he was also processing a claim that was likely to total more than $1 million dollars. The policy holders had been with them over 40 years, had their auto, homeowners, life, umbrella and long term care insurance with them. He said that client would never ever be considered for cancellation.