edf40wrjww2CF_PaperMaster:Desc
The threat of substitutes is the risk that a consumer, or a potential consumer would switch to a competitive product or service. In the area of the health insurance industry, there is no real force that threatens to substitute the health insurance industry. Since there is no alternative of health insurance on an individual and corporate bases. (Grant p120)
The insurance industry consists of plenty of substitutes within the industry itself. Most large insurance companies offer similar types of services. This service would be to protect against risk; regardless if it is auto, home, commercial, health, or life insurance, chances are that there are competitors that can offer similar services. Yet generally, substitutes in the health insurance industry are limited to a select few. In the insurance industry there is a low threat of substitutes. Within the health insurance industry there is an advantage for companies focusing on particular areas, usually allowing them to gain a competitive advantage. This advantage depends entirely on the size of the niche, and on whether or not there are any barriers preventing other firms from entering. (Investopedia)
For the health insurance industry, there are a low number of substitutes that would be able to pose as a real threat to its industry. The definition of substitute products, the health insurance industry is competitive force, as they could take away demand or tie up those customers who choose to use the substitute instead of the main product; one cannot generally label a product as a substitute for health insurance. One can choose to enroll for heath insurance via work, privately, or not seek heath coverage at all. If someone does not seek he ...