Quote:
Originally Posted by gippy
you contradict yourself in your own answer.
You first say "all competing hard to get business, often writing policies at a loss".
Then finish with "companies that charge uncompetetive premiums will not survive".
You also say its a heavily regulated industry, then acknowledge that "it may be true that there's no regulations governing what insurers charge" - which is surely, from a consumers perspective, a significant factor in the purchasing decision.
It is a zero sum game for them to continue to undercut each other, and some of the main insurance companies that we all use ultimately come under a larger conglomerate.
A simple way to test this is to go and look at the income statements of the largest insurance companies and check out how much they are making.....if it was genuinely the case that they were having to offer lower prices due to the competition, they would not be making the margins they are...
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With respect, there's a big difference between you not understanding my points, and me contradicting myself...
Firstly you misunderstand the difference between loss-making and competitive premiums - they are not mutually exclusive. Competitive simply means premiums that are in line with others in the market, whether or not they are profitable or loss-making. There is no contradiction.
Please Google 'insurance cycle' which will give you a better understanding of this.
And regarding regulation, the industry is highly regulated (as it should be to protect consumers), and the premium charged by individual companies is unregulated (as it also should be in a free market economy).
If you understood how insurance worked, you'd also understand that the idea of regulating price in this market is a nonsense, and completely unworkable given the huge number of rating factors involved. (Essentially every applicant has a unique set of rating factors, and therefore has a unique price.)
Finally, in your original post you said that "most of them (insurance companies) are subsidiaries of the same group company" which isn't true, and which I corrected you on. Now in this post you say back to me "some of the main insurance companies that we all use ultimately come under a larger conglomerate" which is really not the same thing at all, and was essentially the same point I made to you in my reply!
