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Commerce Commission: General Insurance Market "Vulnerable to Coordination"

The Commerce Commission concerns about the general insurance market are good reading for anyone interested in the efficient operation of insurance markets. Some of the features of the life insurance market which insurers don't like much (like consumer-facing price comparison websites - think Lifedirect at TradeMe) are exactly what the Commerce Commission would like to see operate in the general insurance market. You should read the whole article, but here are a few quotes: 

  • Product prices and terms are sufficiently transparent to competing insurers, while being opaque to many consumers, and there are incentives to achieve coordination…
  • There is some evidence that prices for HCMV insurance sold via banks are higher than in the direct channel, which may be at least partially attributable to the commission insurers pay to banks to compensate for distribution…

The role of advisers in helping to keep the market honest is acknowledged in passing in some of the comments as well. 



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