If no one undercut, prices for all goods could remain artificially high. Yet, the incentive for the individual firm (and the individual's loved ones, in this ca

If no one undercut, prices for all goods could remain artificially high. Yet, the incentive for the individual firm (and the individual's loved ones, in this case) is to undercut (or pay). An insurance market provides (a) expert knowledge that keeps the price down, (b) an incentivized group that may be able to affect the likelihood of the insured event, (c) a group to provide financial incentives against risky behaviors, thereby pricing behaviors into the market in the same way motorcycle insurance or certain risky living arrangements get priced into the market via their insurers.