State Regulation of Property and Casualty Insurance Rates

Abstract

The author presents an exhaustive analysis of rate control in property and casualty insurance, molding the data to predict future regulatory patterns and offering guidance which may serve the needs of the insurers, the public, and the state and federal governments. I. INTRODUCTIONInsurance regulation is an enormous subject.It involves such diverse matters as licensing agents, approving policy forms, regulating investments, conducting examinations of companies' financial records, and policing reserve requirements.This analysis focuses on one aspect of insurance regulation: the control of rates charged for property and casualty insurance, with particular emphasis upon fire, extended coverage, and allied lines of insurance.This area of regulation is important, not only because it affects all business firms and nearly all households in the United States, but also because rate regulation has been the subject of considerable controversy in recent years.In 1966, premiums written by approximately 1,220 property and casualty companies totaled over twenty and two-tenths billion dollars.Property and casualty insurance includes a variety of forms but two groups of insurance accounted for a major portion of the business.In 1966, ten billion dollars was paid in premiums for automobile insurance, which includes automobile injury liability, automobile property damage, and automobile physical damage.Two and two-tenths billion dollars was paid for fire, extended coverage, and allied lines insurance, which includes losses caused by fire and lightning, damage resulting from smoke and water, damage caused by windstorm, hail, explosion or riot, and such perils as sprinkler leakage and earthquakes.Two and four-tenths billion dollars was paid for multiple peril insurance, which includes package policies covering numerous kinds of property and casualty lines for homeowners and businesses, previously covered by individual policies.Two and five-tenths billion dollars was paid for workmen's compensation insurance, which is not considered in this study since many states provide this insurance, rather than private insurers.One and two-tenths billion dollars was paid for miscellaneous