Let's say it's strictly an individual market, like auto or home insurance.

So what will someone with juvenille-onset diabetes (which is due to genetic factors, not poor lifestyle choices) do when they become an adult? No company in their right mind would insure them, any more than GEICO would insure someone who is 100% guarranteed to total their car every year.

That's the fundamental problem. Claims are not randomly distributed; it's possible to know with quite a bit of certainty who will be sick and who will not.

You could create a govt program to insure everyone who private companies say is "uninsurable", but first, that'd lead to companies creating huge huge categories of uninsurables to dump them all onto the govt, second, it'd no doubt leave Tom screaming about his high tax bill due to goverment socialized medicine.

You could just treat such people for free when they end up at emergency rooms, adding huge costs to hospital bills and being dramatically sub-optimal in terms of preentive care vs emergency treatment.

Or you could just let anyone with a chronic illness, disability due to accident, or just a scary genetic risk factor fend for themselves and die on the street when it comes to that. I don't think that is political sustainable. Bad enough for old people, and especially, when middle-class people who have kids with chronic illnesses or genetic risks see that their children will be left to die, probably with a trip through bankruptcy first, there'd be a revolt as people demand some sort of group-based insurance system.