The Effects of Regulated Premium Subsidies on Insurance Costs

THE EFFECTS OF REGULATED PREMIUM SUBSIDIES ON INSURANCE COSTS: AN EMPIRICAL ANALYSIS OF AUTOMOBILE INSURANCE.

Weiss, Mary A.; Tennyson, Sharon; Regan, Laureen
Journal of Risk and Insurance, September 1, 2010, Vol. 77, No. 3, 597 – 624.

PREPARED BY:

MBA (TOURISM AND HOSPITALITY)-UUM,KL

Marking Scheme

|Component |Weight (%) |Marks Awarded |
|Imagination and innovation |10 | |
|Summary of main message |15 | |
|Critical evaluation |30 | |
|Implications |20 | |
|Research |15 | |
|Presentation |10 | |
|Total |100 | |

Summary of Main Message

This article is mainly about having the state regulation of rates as a means to make automobile insurance more affordable to consumers by restricting insurer profits and pricing practices. Incentive distortions arising from this type of rate regulation might lead to higher accident rates and higher insurance loss costs. In particular, regulators are interested in auto insurance rates that are adequate, so that insurance is readily available in the market, but

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