Insurance Law

Yesterday, Governor Perdue, singed a law recently passed (SB 276) by the legislature that would allow insurers to set prices in a free market for automobile insurance.  My colleague Rich Phillips and I made a couple of presentations to legislative committees on the issue.  Our main point was that Georgia was not in a crisis mode right now, so it would be easy to allow market competition to commence.  Our second point is that the research shows that price regulation in the states over the last 30 years or so does not yield consistently lower prices compared to competitive states.  So, if price regulation does not do a superior job at keeping prices low, why have it? 

For an influential set of papers on auto insurance deregulation, see the Brooking's/AEI Joint Center book here.  Here is our presentation for the talk we gave to the legislative committee.

What is interesting about this bill is that the mandatory coverage (minimum levels) required by law are still subject to price regulation, but the additional coverage are subject to competitive pricing.  Further according to the AJC, the consumer group, Georgia Watch, seemed to be ok with the new law.  However, their website suggests otherwise.