Deregulating Property-Liability Insurance: Restoring Competition and Increasing Market Efficiency (AEI-Brookings Joint Center for Regulatory Studies)

Over the past two decades, the United States has successfully deregulated prices and restrictions on most previously-regulated industries, including airlines, trucking, railroads, telecommunications, and banking. Only a few industries remain regulated, the largest being the property-liability insurance business. In light of recent sweeping financial modernization legislation in other sectors of the insurance industry, this timely volume examines the basis for continued regulation of rates and forms of the U.S. property-liability insurance market. The book focuses on private passenger automobile insurance--the most important personal line of property-liability coverage, with annual premiums of about $120 billion. The authors analyze five state case studies: California, Massachusetts, and New Jersey--three of the most heavily regulated states--as well as Illinois, which has been deregulated for about 30 years, and South Carolina, which began to deregulate in 1997. The study also includes an econometric analysis based on all fifty states over a 25-year period that gauges the impact of regulation on insurance price levels, price volatility, and the proportion of automobiles insured in residual markets. The authors conclude that regulation does not significantly reduce long-run prices for consumers, and generally limits availability of coverage, reduces the quality and variety of services available in the market, inhibits productivity growth, and increases price volatility. Contributors include Dwight Jaffee (University of California, Berkeley), Thomas Russell (Santa Clara University ), Laureen Regan (Temple University), Sharon Tennyson (Cornell University), Mary Weiss (Temple University), John Worrall (Rutgers University), Stephen D'Arcy (University of Illinois, Urbana-Champaign), Martin Grace (Georgia State University), Robert Klein (Georgia State University), Richard Phillips (Georgia State University), Georges Dionne (University of Montreal), and Richard Butler (Brigham Young University).

A Brookings Institution Press and American Enterprise Institute publicationOver the past two decades, the United States has successfully deregulated prices and restrictions on most previously-regulated industries, including airlines, trucking, railroads, telecommunications, and banking. Only a few industries remain regulated, the largest being the property-liability insurance business. In light of recent sweeping financial modernization legislation in other sectors of the insurance industry, this timely volume examines the basis for continued regulation of rates and forms of the U.S. property-liability insurance market.The book focuses on private passenger automobile insurance—the most important personal line of property-liability coverage, with annual premiums of about $120 billion. The authors analyze five state case studies: California, Massachusetts, and New Jersey—three of the most heavily regulated states—as well as Illinois, which has been deregulated for about 30 years, and South Carolina, which began to deregulate in 1997. The study also includes an econometric analysis based on all fifty states over a 25-year period that gauges the impact of regulation on insurance price levels, price volatility, and the proportion of automobiles insured in residual markets. The authors conclude that regulation does not significantly reduce long-run prices for consumers, and generally limits availability of coverage, reduces the quality and variety of services available in the market, inhibits productivity growth, and increases price volatility.Contributors include Dwight Jaffee (University of California, Berkeley), Thomas Russell (Santa Clara University ), Laureen Regan (Temple University), Sharon Tennyson (Cornell University), Mary Weiss (Temple University), John Worrall (Rutgers University), Stephen D'Arcy (University of Illinois, Urbana-Champaign), Martin Grace (Georgia State University), Robert Klein (Georgia State University), Richard Phillips (Georgia State University), Georges Dionne (University of Montreal), and Richard

This timely volume examines the basis for continued regulation of rates and forms of the U.S. property-liability insurance market.It focuses on private passenger automobile insurance -- the most important personal line of property-liability coverage, with annual premiums of about $120 billion. Contributors analyze five states: California, Massachusetts, New Jersey, Illinois, and South Carolina. The study also includes an econometric analysis based on all fifty states over a 25-year period that gauges the impact of regulation on insurance price levels, price volatility, and the proportion of automobiles insured in residual markets. The authors conclude that while regulation does not significantly reduce long-run prices for consumers, it does generally limit availability of coverage, reduce the quality and variety of services available in the market, inhibit productivity growth, and increase price volatility. Property-liability insurance price deregulation : the last bastion? / J. David Cummins Automobile insurance regulation : the Massachusetts experience / Sharon Tennyson, Mary A. Weiss, and Laureen Regan Private passenger auto insurance in New Jersey : a three decade advertisement for reform / John D. Worrall Comment on chapters 2 and 3 / Richard A. Derrig Auto insurance reform : salvation in South Carolina / Martin F. Grace, Robert W. Klein, and Richard D. Phillips Regulation of automobile insurance in California / Dwight M. Jaffee and Thomas Russell Comment on chapter 5 / David Appel Insurance price deregulation : the Illinois experience / Stephen P. D'Arcy Effects of prior approval rate regulation of auto insurance / Scott E. Harrington Comment on chapter 7 / Georges Dionne Form regulation in commercial insurance / Richard J. Butler Insurance regulation in other industrial countries / Georges Dionne. A Brookings Institution Press and American Enterprise Institute publication Over the past two decades, the United States has successfully deregulated prices and restrictions on most previously-regulated industries, including airlines, trucking, railroads, telecommunications, and banking. Only a few industries remain regulated, the largest being the property-liability insurance business. In light of recent sweeping financial modernization legislation in other sectors of the insurance industry, this timely volume examines the basis for continued regulation of rates and forms of the U.S. property