How does FARM minimize market share?
Hi, I'm still trying to understand the context for FARM purposes. In the notes, it mentioned that it will minimize the market share. Can you give me more context, please?
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Hi, I'm still trying to understand the context for FARM purposes. In the notes, it mentioned that it will minimize the market share. Can you give me more context, please?
Comments
The larger context is that Facility Association is a non-profit enterprise. It's funded by private insurers. So in contrast to private insurers, FA is not seeking profits or market share. The ideal situation is that private insurers figure out a way to absorb all the bad risks so that the FARM wouldn't even be necessary. In other words, one of the goals of the FARM is to reduce it's market share (ideally down to zero, although that's probably not realistic.)
The private market has benefits that a non-profit like FA wouldn't have. For example, the private market is more likely to offer innovative products that better meet consumers needs. Innovation is driven by market competition whereas FA, being a non-profit, has no real incentive to innovate.
I'm not sure FA actually takes explicit steps to minimize its market share. It's probably more the case that they don't take steps to increase their market share.
Thank you graham!
You're welcome!