The Economics of Insurance Regulation : A Cross-National Study

This book contains studies of the insurance markets in seven different countries. All the chapters are self-contained and can be read independently. At the same time, a common principle of organising the material was observed. Descriptions of the market characteristics and regulatory institutions are followed by an in-depth economic analysis of the regulatory instruments and their impact on market parameters. This collection of studies is therefore different from all other crossnational comparisons which discuss only the differences in legal frameworks. In contrast, this volume presents a quantitative analysis of the impact of regulatory interventions with an emphasis on the economic aspects of the interventions themselves and the markets in which they occur. The project was initiated by Jorg Finsinger in 1981, when he began to study the German insurance market. In this particular market all important market parameters are centrally controlled by a government agency. Although regulation could be shown to misallocate resources, many questions could not be answered. In particular, it was not clear whether alternative policies were available and desirable or whether a largely deregulated market would be the superior solution. Only an international comparison of insurance market performance could give the answer. The Deutsche Forschungsgemeinschaft promised support for this comparison under grant Fi 318/1-l. Mark Pauly became closely involved with the project in 1982, when he joined the International Institute of Management. The project team met three times at the International Institute of Management in Berlin, in 1982, at the International Institute for Applied Systems Analysis at Laxenburg, in 1983, and again in Berlin in 1984. The financial support of these institutes is gratefully acknowled~ed. In these meetings, the individual country studies were coordinated and an attempt was made to develop a common approach. However, it turned out that the insurance markets of the countries studied were so different, that in each country a somewhat different approach for vii viii Preface analysing the relevant market interventions was required. In spite of the different methods of analysis, the reader should be able to compare and evaluate the regulatory policies in the seven countries. This volume contains invaluable information for economists and policy-makers alike. Preface - Notes on the Contributors - Introduction; J.Finsinger and M.V.Pauly - GREAT BRITAIN - Regulation of the UK Insurance Industry; J.Tapp - UNITED STATES OF AMERICA - Regulation and Quality Competition in the US Insurance Industry; M.Pauly, H.Kunreuther and P.Kleindorfer - GERMANY - A State Controlled The German Case; J.Finsinger - SWEDEN - The Regulation of the Swedish Insurance Industry; K.Skogh - SWITZERLAND - Insurance Regulation in An Outline with Special Reference to Life and Motor Car Liability Insurance; C.B.Blankart and F.Schneider - Regulation Induced Price Instability in Swiss Motor Car Liability Insurance; C.B.Blankart and J.Finsinger - FRANCE - The French Automobile and Life Insurance Markets; J.Finsinger and R.Waldmann - The French Insurance Market; J-F.Outreville - CANADA - The Economics of Life Insurance Regulation; G.F.Mathewson and R.A.Winter - Descriptive Evidence on the Canadian Insurance Industry; G.F.Mathewson and R.A.Winter - Index Front Matter....Pages i-xi Introduction....Pages 1-23 Front Matter....Pages 25-25 Regulation of the UK Insurance Industry....Pages 27-61 Front Matter....Pages 63-63 Regulation and Quality Competition in the US Insurance Industry....Pages 65-107 Front Matter....Pages 109-109 A State Controlled Market: the German Case....Pages 111-160 Front Matter....Pages 161-161 The Regulation of the Swedish Insurance Industry....Pages 163-186 Front Matter....Pages 187-187 Insurance Regulation in Switzerland: an Outline with Special Reference to Life and Motor Car Liability Insurance....Pages 189-199 Regulation-induced Price Instability in Swiss Motor Car Liability Insurance....Pages 200-211 Front Matter....Pages 213-213 The French Automobile and Life Insurance Markets....Pages 215-229 The French Insurance Market....Pages 230-253 Front Matter....Pages 255-255 The Economics of Life Insurance Regulation: Valuation Constraints....Pages 257-282 Back Matter....Pages 283-300