In the market for most consumer goods and services we assume the law of supply and demand, operating through open competition, determines the price. Competition, however, does not necessarily work to the consumer’s advantage in the insurance market. Here are the questions. How does the pricing of an insurance policy for the insurer differ from a bologna manufacture’s pricing its product? Why does the difference in pricing problems require that insurance pricing be subject to regulation? Why might be lowest-priced insurance policy be undesirable from the consumer’s standpoint?
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