The incentives are to price risk correctly so that they can price their policies cheap enough to beat the competition while not going out of business from paying more in claims than they receive in premiums.

What do you think their incentives should be?

There is a cap to how much and insurance company can make (health insurance for instance are capped at 20% of premiums). To make more money next year they can sign up more policy holders or make sure costs go up. Companies also often have a large stake in the fix it shops/clinics/hospitals so they recoup much of their cost that way. Market capture, if it cost more to buy insurance than to fix it/absorb the cost without insurance why would you buy insurance. It is useful for the insurance companies to see costs increase.

Sure there can be good arguments for having insurance. Insurance companies are part of the financial sector and will be working to make more money. That is a fine incentive for the insurance industry but for the insurance consumer it is a reason to be skeptical and careful.