State Regulation and Consumer Protection in the Insurance Industry

Abstract

In the recent debate over the appropriate governmental level at which to regulate insurance markets, opponents of a new federal role often raise concerns about the adequacy of consumer protection if regulation is removed from the states. This paper analyzes the need for market conduct regulation in insurance markets, and the arguments for state versus federal provision of this type of regulation. The paper then examines the provision of consumer protection regulation by the states in light of proposals for an increased federal role in insurance regulation.

Keywords: Insurance regulation, federalism, consumer complaints.

JEL Classification: G22, L51, H77.