Abstract
This article examines rate regulation and the market share of insurers using exclusive agents, known as direct writers. Direct writers have lower market share in rate regulation states; however, the effect is observed in both the regulated automobile lines and the less regulated homeowners' insurance. This suggests that statute implementation and not the statue itself affects insurers' market shares. Including measures of the political influence of insurers using nonexclusive agents and that of their agents on regulators in estimation removes the association between regulation and direct writers' market share. Combined with the different parties' support for regulation, the results indicate that nonexclusive agents used political influence to slow direct writers' growth.
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Gron, A. Regulation and insurer competition: Did insurers use rate regulation to reduce competition?. J Risk Uncertainty 11, 87–111 (1995). https://doi.org/10.1007/BF01067679
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DOI: https://doi.org/10.1007/BF01067679