> As a group you have more leverage purchasing pretty much any service although this is true, the leverage gained through group is different for other services

> As a group you have more leverage purchasing pretty much any service although this is true, the leverage gained through group is different for other services, where a bulk order is much cheaper. Assuming everyone's making rational decisions, the only people that would want insurance would be the high risk ones. Insurance companies would loss money regardless of the rates they charge because the only rational people that would pay it would be the ones that think they would likely benefit from it, since they have additional information (eating habit, risk level, etc ) over the insurance company. By putting a lot of people (high risk and low risk) in a group, the insurance company can balance out the group and make a small gain on top of the expected payout.