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Why would they want that? Their job is to accurately assess risk, and then charge appropriately for insurance. If the risk goes down, so does the amount they ch
by eridius 10y ago
Why would they want that? Their job is to accurately assess risk, and then charge appropriately for insurance. If the risk goes down, so does the amount they charge. If your argument is that perception of risk will be higher than actual risk and therefore they'll be able to sustain a higher margin on their insurance policies, then I'd point out that you're completely ignoring competition. If one company does charge significantly more than they have to because the public perception of risk doesn't match reality, some other company will come in and charge less for the same policy, thus driving the price back down to an appropriate level.
- taneq 10y agoBecause their margin is a percentage of the total insurance amount.
- eridius 10y agoWell, the cheaper the insurance, the more of it they'll sell. That said, if insurance gets cheap enough, surely they can justify having higher margins because they still need to meet their operating costs.
- taneq 10y agoIs insurance not somewhere near market saturation in your local market? Sure, there's a limited amount of flex if prices drop, but there isn't that much room to grow.
- eridius 10y agoDepends on the type of insurance you're talking about. In any case, if risks decrease and therefore insurance costs decrease, besides pushing for higher margins, insurance companies could also push for having more comprehensive plans that cost more than the basic ones. People who only opt for the basic plans now might shell out for the more comprehensive one if the prices overall drop, and so the more comprehensive ones would allow the insurance companies to retain their margins.