it's not that the price is necessarily competitive, but rather, that there is (and can be) competition along multiple dimensions even in markets with high acquisition costs. of course, there could just not be enough competition in totality to drive prices down near the marginal cost of production, but significant customer acquisition costs don't necessarily indicate an inefficient market, since complex products (like insurance) require more effort toward customer education (e.g., sales & marketing).

my guess, however, is that the current equilibrium point above the marginal cost of production is likely more a function of regulatory capture. insurance went through a broad round of demutualization over the past few decades, and some of the capital gains of that process surely went into legal and political initiatives.

to the article's point though, insurance is an adversely-incentivized industry driven to over-financialize every possible risk, which is where it veers into gambling (just like equities and derivatives) and sensationalizing paranoia (just like news). insurance should be reserved for unlikely but impactful natural events, not common or man-made ones, which is what insurance has expanded into.