The cost of entering the market is so high that it’s functionally impossible for any new carriers to enter the market without having major investor backing. The only way to make the cost reasonable for most people is to have a very large risk pool; you can’t get a large risk pool without having a lot of people signing up, which means already having the infrastructure in place to handle that kind of numbers.
If you insure, say, 1000 people, and 999 of them are incredibly safe drives, and one of them drives drunk and kills a busload of school children–costing the insurer a “mere” $1,000,000 because that was the limit of their liability–that means that every person in that risk pool needs to pay $1000 annually for that single accident, and that’s just to break completely even, without accounting for any of the overhead involved in running an insurance company.
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This is only true if the insurance companies are colluding and are actively stopping anyone else entering the market.
If one companies rates are too high then customers will go elsewhere.
If you undercut your opponents too much then you are just leaving money on the table and are susceptible to being bought out
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Outside the US there is a no claims bonus /discount that lowers the rate if you drive without accident.
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The cost of entering the market is so high that it’s functionally impossible for any new carriers to enter the market without having major investor backing. The only way to make the cost reasonable for most people is to have a very large risk pool; you can’t get a large risk pool without having a lot of people signing up, which means already having the infrastructure in place to handle that kind of numbers.
If you insure, say, 1000 people, and 999 of them are incredibly safe drives, and one of them drives drunk and kills a busload of school children–costing the insurer a “mere” $1,000,000 because that was the limit of their liability–that means that every person in that risk pool needs to pay $1000 annually for that single accident, and that’s just to break completely even, without accounting for any of the overhead involved in running an insurance company.