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This is the first comprehensive study of the history, politics, and economics of the insurance industry in the United States. It is designed as a theoretical challenge to the conventional wisdom in political economy which says that regulation benefits the regulated. In fact, Meier shows that because the insurance industry is far too divided to impose its will on the regulatory system, the political economy of regulation is actually the product of a complex interaction of industry interests, consumer groups, insurance regulations, and political elites.
Using both historical and quantitative approaches, the author examines a variety of insurance issues including the development of insurance regulation; the impact of regulation on the availability and price of insurance; the stringency of state regulation; and the product liability insurance crisis of 1985-86. The book concludes with a series of recommendations for reforming the regulation of insurance.
Tables
Abbreviations
Preface
1. The Insurance Industry
The Life Insurance Industry
The Property and Casualty Industries
Summary
2. A Theory of Government Regulation
Economic Theories of Regulation Political Theories of Regulation
Summary
3. State and Federal Government Roles in Insurance Regulation
Creating an Economic Environment
Direct Federal Regulation of Insurance
Federal Government Insurance Programs
State Regulation of Insurance
Summary
4. State Regulation of Insurance:
From Free Markets to Cartels to Free Markets
Early Regulation of Insurance
Twentieth Century Insurance Regulation: The Beginning
Regulating Investment Decisions
Property and Casualty Insurance:
The South-Eastern Underwriters Case
The McCarran-Ferguson Act
The Growth of Competition
A Theoretical Recapitulation
5. The Liability Insurance Crisis of 1985-86
Causes of the Crisis
Industry Internal Responses to the Crisis
External Demands on the Political System
The Opposing Coalition
Actions of Public Officials
The Legislative Battle
Actions of Policyholders
Politics at the Federal Level
The Results of the Tort Reform Effort
Cash Flow During the Liability Crisis
A Theoretical Recapitulation
6. Federal Issues in Insurance Regulation
Mail Order Insurance
The Federal Flood Insurance Program
No-Fault Automobile Insurance
The Unisex Issue
Federal Taxes
A Theoretical Recapitulation
7. An Empirical Examination of State Insurance Regulation
Industry
Potential Consumer Groups
Bureaucratic Resources
Political Elites
Regulatory Stringency
Taxing Insurance Companies
Regulating Insurance Prices
The Impact of Regulation on Price
Litigation and the Price of Insurance
No-Fault Automobile Insurance
Other State Restrictions on Automobile Insurance
The Impact of Price on Availability
Access to Insurance
Conclusion
8. The Political Economy of Insurance Regulation
Empirical Findings
Policy Recommendations
Conclusion
Notes
Bibliography
Index