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0 pointsozr1y ago0 comments

Insurance carriers have an incentive to compete on price like any other business. There are plenty of options. The margins are generally pretty small, and there is a lot of regulation around what portion of payments must be used for claims.

There's a few obvious exceptions, but plenty of insurance isn't required.

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sneed_chucker1y ago

They might have an incentive to compete, but I think they also have an incentive to collude. Last time I shopped around for insurance it seemed like the latter was taking place.

You're required to get homeowner's insurance if you have a mortgage, and you're required to have car insurance if you want to drive a car on public roads.

So the majority of Americans are forced to purchase at least one of these in order to live their normal lives, which makes demand inelastic.

overstay89301y ago

Collusion is nearly impossible in commodity insurance (i.e. policies you can buy on a website), it’s just way too easy to detect and whistleblowers know they can make a fortune by reporting it.

It’s mostly your own governments fault if you can’t find a cheap policy, there are millions of people who will probably never have to file an insurance claim in their life making up for government decisions to insure people who wouldn’t normally be able to be insured because of poor decision making skills.

ozrOP1y ago

You aren't required to purchase a home or drive a car. If you chose to, as most Americans do, then yes: the demand is inelastic.

But that doesn't imply what you're saying unless the supplier has monopoly power, which they, by law, do not.

lokar1y ago

For the car, you only need liability, and you can generally post a bond instead.

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