The Political Economy of Regulation

The Case of Insurance

By Kenneth J. Meier

Subjects: Public Administration
Series: SUNY series in Public Administration
Paperback : 9780887067327, 230 pages, July 1988
Hardcover : 9780887067310, 230 pages, August 1988

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Table of contents




1. The Insurance Industry

The Life Insurance Industry
The Property and Casualty Industries

2. A Theory of Government Regulation

Economic Theories of Regulation Political Theories of Regulation

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

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

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

8. The Political Economy of Insurance Regulation

Empirical Findings
Policy Recommendations






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.

Kenneth J. Meier is Professor of Political Science and Public Affairs at the University of Wisconsin, Madison.