Academic journal article Journal of Risk and Insurance

Deregulating Property-Liability Insurance: Restoring Competition and Increasing Market Efficiency

Academic journal article Journal of Risk and Insurance

Deregulating Property-Liability Insurance: Restoring Competition and Increasing Market Efficiency

Article excerpt

Deregulating Property-Liability Insurance: Restoring Competition and Increasing Market Efficiency, by J. David Cummins, editor, 2002, Washington D.C.: AEI-Brookings Joint Center for Regulatory Studies

Given the purpose of the book-to provide an observational framework for considering the wisdom of property-liability insurance price regulation in general-the choice to focus on automobile insurance pricing makes sense. The size and importance of the auto insurance line to the property-liability insurance industry is staggering, such that the question of whether to deregulate it is of significant interest to a mass group. And it is one of only a few property-liability insurance lines that remain regulated, thus providing ease of observation. Finally, private-passenger auto insurance is dominated by the personal lines, therefore making the findings of these researchers relevant to public policy concerns.

Based largely on case studies conducted by several current leaders in risk management and insurance research, the compilation of their findings makes a compelling overall argument for deregulation of auto insurance pricing. Cummins, in the introductory chapter, provides an excellent synopsis of the research findings, and concludes overall that the auto insurance marketplace is more than competitive enough to allow competitive market equilibrium to do its work without the intervention of regulators. Indeed, he makes clear that none of the case studies found evidence of excessive rates or collusion in states where competitive market pricing is heavily used, but rather that rates are lower and less volatile within deregulated as opposed to regulated markets. …

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