They're selling a service that people are required to buy. It should be no surprise that the equilibrium reached is "be as consumer hostile as possible without violating the letter of the law enough to get told to stop"
If insurance is so overpriced, then why don't other companies enter the market?
I don't think insurance companies have crazy profit margins, so I don't think it is really price gouging going on. It might be shady competitive practices, to trick people into not realizing they are paying more, but I don't think it is because people are required to have insurance.
https://www.naic.org/documents/topic_insurance_industry_snap...
The United States' property and casualty industry's total profit margin on the whole was about nine tenths of a percent in 2018, which was a reversal from being net unprofitable in 2017.
There are about 2500 property and casualty insurance companies in the United States. Surely there's overestimation since (I'm guessing) the NAIC will count an insurance company in several states as several companies for the purposes of a count, but even if that's not the case, there are at least a hundred car insurance companies to choose from in any given state.
The purpose of an independent insurance agent (if everything goes right) is to help a customer select the best policy for their risk, and there are a ton of independent insurance agents, so one hopes that severe price gouging doesn't persist. However, not everyone uses an insurance agent - or the agent only writes with one business - so in practice, this kind of overpaying can occur to lots of people.
No, but we absolutely see price gouging in shelter.
I think as more startup companies enter insurance, prices are going to be better & more competitive.
There's not a law that requires me to buy food, nor a law that requires me to buy specific types of food. I can grow my own food, or buy from other people locally if I wanted to.
> If insurance is so overpriced, then why don't other companies enter the market?
It takes extremely deep pockets to be able to sell insurance in the first place, and it's a relatively regulated industry.
Anyone can grow some tomatoes and sell them to me at a farmers market with minimal overhead. Few can sell me comprehensive insurance that will pay out when I need it.
Anyway the reason I think those dynamics instead is because I have seen it in cable, garbage collection, ISPs, and banks. They could be attempting old school dark patterns to exploit inertia and cognitive load in customers but that is a pennywise pound foolish move - the new customers have sales overhead expenses in addition to "maintenance" recurring costs.