Abstract

http://ssrn.com/abstract=908984
 
 

References (28)



 
 

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Regulator Performance, Regulatory Environment and Outcomes: An Examination of Insurance Regulator Career Incentives on State Insurance Markets


Martin F. Grace


Georgia State University - Robinson College of Business; Georgia State University - Andrew Young School of Policy Studies

Richard D. Phillips


Georgia State University

February 2, 2007


Abstract:     
In this paper we test whether the past or future labor market choices of insurance commissioners provides incentives for regulators in states with price regulation to either favor or oppose the industry by allowing prices that differ significantly from what would otherwise be the competitive market outcome. Using biographical data on insurance regulators, economic and state specific market structure and regulatory variables, and state premium and loss data on the personal automobile insurance market, we find no evidence consumers in prior approval states paid significantly different "unit prices" for insurance than consumers in states that allow competitive market forces to determine equilibrium prices during the time period 1985-2002. We do, however, find evidence regulators who seek higher elective office following their tenure as insurance commissioner allow higher overall "unit prices" relative to competitive market states. The "unit price" of insurance in regulated states is not statistically different from the competitive market outcome for regulators that make lateral moves back into state government and it is mildly higher for regulators who enter the insurance industry following their tenure. Overall the results are consistent with the existence of asymmetric information in the regulatory process that agents use to enhance their career aspirations.

Number of Pages in PDF File: 37

Keywords: Auto Insurance, Price Regulation, Regulatory Incentives, Revolving Door

JEL Classification: G22, G28, L51

working papers series


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Date posted: June 19, 2006  

Suggested Citation

Grace, Martin F. and Phillips, Richard D., Regulator Performance, Regulatory Environment and Outcomes: An Examination of Insurance Regulator Career Incentives on State Insurance Markets (February 2, 2007). Available at SSRN: http://ssrn.com/abstract=908984 or http://dx.doi.org/10.2139/ssrn.908984

Contact Information

Martin F. Grace (Contact Author)
Georgia State University - Robinson College of Business ( email )
P.O. Box 4036
Atlanta, GA 30302-4036
United States
404-651-2789 (Phone)
404-651-4219 (Fax)
HOME PAGE: http://www.rmi.gsu.edu
Georgia State University - Andrew Young School of Policy Studies
Department of Economics
35 Broad Street, 6th Floor
Atlanta, GA 30303-3083
United States
Richard D. Phillips
Georgia State University ( email )
P.O. Box 4036
Atlanta, GA 30302-4036
United States
404-651-3397 (Phone)
404-651-4219 (Fax)
HOME PAGE: http://www.rmi.gsu.edu/Faculty/pages/phillips.htm
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