A Single-License Approach to Regulating Insurance

26 Pages Posted: 21 May 2008

See all articles by Henry N. Butler

Henry N. Butler

George Mason University - Antonin Scalia Law School, Faculty

Larry E. Ribstein

University of Illinois College of Law (deceased); PERC - Property and Environment Research Center

Date Written: May 18, 2008

Abstract

State regulation of insurance companies has been criticized for many years because of the burden imposed on insurers by having to comply with the laws of many jurisdictions. These higher costs are passed on to consumers. The problems with the current regulatory structure are prompting calls for increased federal regulation of insurance. However, all proposals to federalize insurance regulation create opportunities for abuse at the hands of the federal government and fail to utilize the benefits of a federal system. This article shows how many of the problems of the current system can be addressed without resorting to a large scale intrusion of federal regulators into insurance markets. The proposed solution calls for minimal federal intervention to provide for jurisdictional competition between states that would be allowed to charter insurers that could operate nationally with only the single license granted by the charter. This single-license approach addresses the most salient concerns of proponents of federal optional chartering. It also has the potential for triggering competition and innovation in insurance products and rates while preserving a meaningful role for state regulation.

Keywords: insurance, financial services, optional federal charter, federalism, regulation

JEL Classification: G2, G38, K2, L5

Suggested Citation

Butler, Henry N. and Ribstein, Larry Edward, A Single-License Approach to Regulating Insurance (May 18, 2008). Northwestern Law & Econ Research Paper No. 08-10; U Illinois Law & Economics Research Paper No. LE08-015. Available at SSRN: https://ssrn.com/abstract=1134792 or http://dx.doi.org/10.2139/ssrn.1134792

Henry N. Butler (Contact Author)

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States
703-993-8644 (Phone)

Larry Edward Ribstein

University of Illinois College of Law (deceased)

PERC - Property and Environment Research Center

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

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