Insurance Regulation and the Composition of Insurance Markets

Journal of Insurance Regulation, Vol. 31, pp. 27-57, 2012

35 Pages Posted: 10 Apr 2013  

Mary Kelly

Wilfrid Laurier University - School of Business & Economics

Anne E. Kleffner

University of Calgary - Haskayne School of Business

Si Li

Wilfrid Laurier University - School of Business & Economics

Date Written: April 4, 2012

Abstract

The Canadian property/casualty insurance industry is subject to significant regulation which varies considerably by province. This article examines whether these differences in regulation, as well as demographic factors and economic conditions, impact the number and characteristics of auto insurers that choose to operate within each province. Using five Poisson regression models, we model the number of auto insurers (total and by distribution technology and ownership) as a function of provincial characteristics. While provinces with smaller markets — whether because of population or government-run auto insurance — have fewer insurers, we find that regulation has the greatest impact on the number of direct writers in a province. Market cycle conditions also affect the number of insurers, with the number of insurers increasing as the market softens. Because the majority of auto insurers in Canada also sell commercial insurance, we conjecture that intervention in auto insurance markets may have unintended consequences on other insurance markets.

Keywords: Insurance regulation, insurance markets, property/casualty insurance

JEL Classification: G22

Suggested Citation

Kelly, Mary and Kleffner, Anne E. and Li, Si, Insurance Regulation and the Composition of Insurance Markets (April 4, 2012). Journal of Insurance Regulation, Vol. 31, pp. 27-57, 2012. Available at SSRN: https://ssrn.com/abstract=2247791

Mary Kelly (Contact Author)

Wilfrid Laurier University - School of Business & Economics ( email )

Waterloo, Ontario N2L 3C5
Canada

Anne E. Kleffner

University of Calgary - Haskayne School of Business ( email )

2500 University Drive, NW
Calgary, Alberta T2N 1N4
Canada
403-220-8596 (Phone)
403-284-7903 (Fax)

Si Li

Wilfrid Laurier University - School of Business & Economics ( email )

Waterloo, Ontario N2L 3C5
Canada

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