FROM COMPETITION TO REGULATION: THE SIX-YEAR BATTLE TO REGULATE CALIFORNIA'S INSURANCE MARKETS |
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| Authors: | Joseph A Fields Chinmoy Ghosh Linda S Klein |
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| Institution: | an Associate Professor of Finance at the University of Connecticut at Storrs;an Associate Professor of Finance at the University of Connecticut at Storrs;an Associate Professor Finance at the University of Connecticut at Storrs. |
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| Abstract: | Abstract: The passage of California's Proposition 103 in November 1988 changed the State's regulatory structure for insurers from a competitive to a heavily regulated system. The six-year legal battle that followed resulted in several California Supreme Court and United States Supreme Court rulings and an ultimate implementation of rate roll backs on property-liability insurers on November 22, 1994. The study examines both property-liability and life insurers' returns. While only property-liability insurers are affected by the rale rollback and prior approval rate regulation, both life and property-liability insurers are affected by the proposition's other provisions. This paper examines the effect of successive changes on both types of insurance companies and analyzes the differential impact of the changes in regulatory structure. |
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