IDEAS home Printed from https://ideas.repec.org/a/bla/rmgtin/v1y1998i2p54-71.html
   My bibliography  Save this article

From Competition To Regulation: The Six‐Year Battle To Regulate California'S Insurance Markets

Author

Listed:
  • Joseph A. Fields
  • Chinmoy Ghosh
  • Linda S. Klein

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.

Suggested Citation

  • Joseph A. Fields & Chinmoy Ghosh & Linda S. Klein, 1998. "From Competition To Regulation: The Six‐Year Battle To Regulate California'S Insurance Markets," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 1(2), pages 54-71, January.
    • Handle: RePEc:bla:rmgtin:v:1:y:1998:i:2:p:54-71
    DOI: j.1540-6296.1998.tb00072.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1540-6296.1998.tb00072.x
    Download Restriction: no
    File URL: https://libkey.io/j.1540-6296.1998.tb00072.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Michael Rothschild & Joseph Stiglitz, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 90(4), pages 629-649.
    2. John M. Clapp, 1985. "Quantity Competition in Spatial Markets with Incomplete Information," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 100(2), pages 519-528.
    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. Harrington, Scott E, 1987. "A Note on the Impact of Auto Insurance Rate Regulation," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 166-170, February.
    5. Spiller, Pablo T, 1990. "Politicians, Interest Groups, and Regulators: A Multiple-Principals Agency Theory of Regulation, or "Let Them Be Bribed."," Journal of Law and Economics, University of Chicago Press, vol. 33(1), pages 65-101, April.
    6. Eckert, Ross D, 1981. "The Life Cycle of Regulatory Commissioners," Journal of Law and Economics, University of Chicago Press, vol. 24(1), pages 113-120, April.
    7. Mikkelson, Wayne H. & Partch, M. Megan, 1988. "Withdrawn Security Offerings," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 23(2), pages 119-133, June.
    8. Richard A. Posner, 1974. "Theories of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 5(2), pages 335-358, Autumn.
    9. Fields, Joseph A. & Ghosh, Chinmoy & Kidwell, David S. & Klein, Linda S., 1990. "Wealth effects of regulatory reform *1: The reaction to California's proposition 103," Journal of Financial Economics, Elsevier, vol. 28(1-2), pages 233-250.
    10. Campbell, Cynthia J. & Wesley, Charles E., 1993. "Measuring security price performance using daily NASDAQ returns," Journal of Financial Economics, Elsevier, vol. 33(1), pages 73-92, February.
    11. Schwert, G William, 1981. "Using Financial Data to Measure Effects of Regulation," Journal of Law and Economics, University of Chicago Press, vol. 24(1), pages 121-158, April.
    12. William Boyes & John McDowell, 1989. "The selection of public utility commissioners: A re-examination of the importance of institutional setting," Public Choice, Springer, vol. 61(1), pages 1-13, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Antonio Estache & Liam Wren-Lewis, 2010. "What Anti-Corruption Policy Can Learn from Theories of Sector Regulation," Working Papers ECARES ECARES 2010-033, ULB -- Universite Libre de Bruxelles.
    2. Antonio Estache & Liam Wren-Lewis, 2011. "Anti-Corruption Policy in Theories of Sector Regulation," Chapters, in: Susan Rose-Ackerman & Tina Søreide (ed.), International Handbook on the Economics of Corruption, Volume Two, chapter 9, Edward Elgar Publishing.
    3. Grace, Martin F. & Phillips, Richard D., 2008. "Regulator performance, regulatory environment and outcomes: An examination of insurance regulator career incentives on state insurance markets," Journal of Banking & Finance, Elsevier, vol. 32(1), pages 116-133, January.
    4. Tomaso Duso, 2005. "Lobbying and regulation in a political economy: Evidence from the U.S. cellular industry," Public Choice, Springer, vol. 122(3), pages 251-276, March.
    5. Brezis, Elise S., 2017. "Legal conflicts of interest of the revolving door," Journal of Macroeconomics, Elsevier, vol. 52(C), pages 175-188.
    6. Jensen, Olivia & Wu, Xun, 2017. "The hybrid model for economic regulation of water utilities: Mission impossible?," Utilities Policy, Elsevier, vol. 48(C), pages 122-131.
    7. Rodrigo M. S. Moita & Claudio Paiva, 2013. "Political Price Cycles in Regulated Industries: Theory and Evidence," American Economic Journal: Economic Policy, American Economic Association, vol. 5(1), pages 94-121, February.
    8. Kempf, Elisabeth, 2017. "The Job Rating Game: The Effects of Revolving Doors on Analyst Incentives," Working Papers 258, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    9. Mountain, Bruce R., 2019. "Ownership, regulation, and financial disparity: The case of electricity distribution in Australia," Utilities Policy, Elsevier, vol. 60(C), pages 1-1.
    10. Lehr, William & Sicker, Douglas, 2017. "Communications Act 2021," 28th European Regional ITS Conference, Passau 2017 169478, International Telecommunications Society (ITS).
    11. Ando, Amy, 1998. "Delay on the Path to the Endangered Species List: Do Costs and Benefits Matter," RFF Working Paper Series dp-97-43-rev, Resources for the Future.
    12. repec:hal:spmain:info:hdl:2441/8527 is not listed on IDEAS
    13. Oleh Pasko, 2018. "Theories of Regulation in the Context of Modern Practice of Accounting Regulation," Oblik i finansi, Institute of Accounting and Finance, issue 2, pages 37-46, June.
    14. Wm. Mounts & Clifford Sowell & James Lindley, 1985. "Rent-seeking over time: The continuity of capture," Public Choice, Springer, vol. 46(1), pages 87-94, January.
    15. Zheying Wu & Robert Salomon, 2017. "Deconstructing the liability of foreignness: Regulatory enforcement actions against foreign banks," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(7), pages 837-861, September.
    16. Elvio Accinelli & Osvaldo Salas, 2019. "El estado de bienestar como un bien público no excluible / The welfare state as a public good not excludable," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 34(2), pages 243-273.
    17. Lawrence J. White, 2000. "Reducing the Barriers to International Trade in Accounting Services: Why it Matters, and the Road Ahead," Working Papers 00-04, New York University, Leonard N. Stern School of Business, Department of Economics.
    18. Ray Ball, 2009. "Market and Political/Regulatory Perspectives on the Recent Accounting Scandals," Journal of Accounting Research, Wiley Blackwell, vol. 47(2), pages 277-323, May.
    19. Matthew D. Mitchell, 2019. "Uncontestable favoritism," Public Choice, Springer, vol. 181(1), pages 167-190, October.
    20. Krisztina Antal-Pomázi, 2020. "Corporate Interest in Antitrust Enforcement," Proceedings of Economics and Finance Conferences 10912816, International Institute of Social and Economic Sciences.
    21. Simshauser, P., 2020. "Merchant utilities and boundaries of the firm: vertical integration in energy-only markets," Cambridge Working Papers in Economics 2039, Faculty of Economics, University of Cambridge.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:rmgtin:v:1:y:1998:i:2:p:54-71. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1098-1616 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.