Citation

Sharon Tennyson. J. Risk Insur. 1993; 60(1): 36-58.

Copyright

(Copyright © 1993, American Risk and Insurance Association, Publisher John Wiley and Sons)

DOI

10.2307/253098

PMID

unavailable

Abstract

This article investigates whether regulatory lag affects the character of unit prices (inverse loss ratios) in regulated private passenger automobile insurance markets. The analysis is developed in the context of a simple model of a regulated insurance market. The model predicts that regulatory lag will increase the intertemporal dependence of unit prices in regulated markets. The model is estimated using data from auto liability insurance markets in 35 states over the period 1975-1986. The estimation results support the view that regulatory lag is significant for most firms in most regulated states.