Study on Short-Term Small-Value Insurance Sales of Big Tech Platform and Consumer Utility: Focused on the Self-Preferencing of the Platform

This paper analyzes the effect of the Big Tech platforms’ data acquisition and self-preferencing on the entry decisions of short-term small-value (STSV) insurance carriers with a two-period model. When an online insurance product comparison and recommendation platform can acquire sales data and has low production costs, these abilities to gain advantages over STSV insurance carriers will influence the insurance carriers’ entry decisions differently depending on the size of demand they are facing. While the platform‘s capabilities in data acquisition and self-preferencing will facilitate the entry of the carriers with low demand, it will threaten the entry of the ones with intermediate-sized demand. From the welfare perspective, these capabilities can improve consumer surplus and total welfare by lowering the platform’s optimal solicitation fee rate for STSV insurance products but reduce STSV insurance carriers' profits.