I think its fair to charge dog owners higher rates. If they didn't, everyone would have to pay higher rates for the liability that having a dog causes. Insurance is first and foremost a numbers game, and owning a dog is a liability for an insurance company, because even a minor bite can cause a big lawsuit.
I don't think it's fair to refuse to insure someone for any reason, but it's fair to charge more. They also charge more if you live in a bad neighborhood, don't have fire alarms connected to the police, move around alot, are younger, the building is older, on and on. Even something as obscure as how far away the nearest fire hydrant is affects your insurance rates in some cases.
Not all dogs are mean, of course. But the only way for them to establish that would be to send out an animal behaviorist to every dog owner's house and test their aggression levels-- which would in turn raise everyone's premiums anyway.