October 23, 2017

Competition ‘Across State Lines’ Won’t Make Insurance Any Cheaper

Photo by free pictures of money
Insurance photo
Photo by free pictures of money

We hear this over and over.

“Competition will drive down costs.”

“Competition across state lines will drive down costs.”

In most cases that is true. But Insurance is not most cases. How Insurance Companies make their money seems to be a complete mystery to most Americans. Probably because it is not like anything that they are familiar with.

Let’s take a company that makes a product. If they only see the product in one state and there is no outside competition, they can set the price to whatever the market is willing to pay. So the price will be higher because, well, they can get by with it. And if we bring in several competitors, most likely the price will come down.

And the company makes money by manufacturing an item and selling it for more than their costs to make a profit.

We all understand this business model.

But that is not how Insurance works.

Read more: Competition ‘Across State Lines’ Won’t Make Insurance Any Cheaper. | Virginia Right!

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About Tom White 17 Articles
Tom is a US Navy Veteran, owns an Insurance Agency and is currently an IT Manager for a Virginia Distributor. He has been published in American Thinker, currently writes for the Richmond Examiner as well as Virginia Right! Blog. Tom lives in Hanover County, Va and is involved in politics at every level and is a Recovering Republican who has finally had enough of the War on Conservatives in progress with the Leadership of the GOP on a National Level.