Question

Consider the five forces model of Professor Michael Porter. Discuss the nature of each element and the role these might play in pricing health insurance products. Which of the five forces do you consider the most important and why?

Answer 1

Porters five force model for health insurance is given below:

Threat of New Entrants	Competitive Rivalry	Bargaining power of suppliers	Bargaining power of customers	Threat of substitute product or services
Low on threat for new entrants as where insurance and costs are balanced so that values the customers.	High competition which makes the health insurance benefit, the patients can decide on their choice as switching cost is high.	Bargaining power of suppliers is low as where there are only limited suppliers in the health insurance sector, so that quality has been focused on high.	Choices on the product and services are increased, so that the patients would chose their best, so there is always high bargaining power of customers in health insurance.	The customers will always prefer high quality with low price strategy. So the competition is a threat to the health insurance sector.