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Life Insurance: Regulation As Contract Enforcement

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  • Alan D. Morrison

Abstract

Debating the minutiae of insurance regulation without a clear understanding of why insurance companies are regulated is futile. In this article I discuss the economic rationale for insurance business regulation and conclude that the appropriate role of the regulator is to enforce contracts which might otherwise be broken. I argue that if this is the case, regulation should be optional, and that it need not be a monopoly activity.

Suggested Citation

  • Alan D. Morrison, 2004. "Life Insurance: Regulation As Contract Enforcement," Economic Affairs, Wiley Blackwell, vol. 24(4), pages 47-52, December.
    • Handle: RePEc:bla:ecaffa:v:24:y:2004:i:4:p:47-52
    DOI: 10.1111/j.1468-0270.2004.00515.x
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    References listed on IDEAS

    as
    1. J. Kornai & E. Maskin & G. Roland, 2004. "Understanding the Soft Budget Constraint," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 11.
    2. Morrison, Alan & White, Lucy, 2004. "Is Deposit Insurance A Good Thing, And If So, Who Should Pay for It?," CEPR Discussion Papers 4424, C.E.P.R. Discussion Papers.
    3. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    4. Alan Morrison & Lucy White, 2002. "Crises and Capital Requirements in Banking," Economics Series Working Papers 2002-FE-05, University of Oxford, Department of Economics.
    5. Alan Morrison & Lucy White, 2004. "Is Deposit Insurance a Good Thing, and If So, Who Should Pay for It?," Economics Series Working Papers 2004-FE-08, University of Oxford, Department of Economics.
    6. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 24(Win), pages 14-23.
    7. Ray Rees & Hugh Gravelle & Achim Wambach, 1999. "Regulation of Insurance Markets," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 24(1), pages 55-68, June.
    8. Lucy White & Alan D. Morrison, 2002. "Crises and Capital Requirements in Banking," OFRC Working Papers Series 2002fe05, Oxford Financial Research Centre.
    9. Mayers, David & Smith, Clifford W, Jr, 1988. "Ownership Structure across Lines of Property-Casualty Insurance," Journal of Law and Economics, University of Chicago Press, vol. 31(2), pages 351-378, October.
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    Cited by:

    1. Benjamin Lorent, 2006. "Raisons fondamentales d'une régulation prudentielle du secteur des assurances," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 49(3), pages 203-244.

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