Shadow Insurance Regulation Committee issues statements on Commercial Insurance Deregulation, Workers’ Comp, and Electronic Comm

Washington, DC, April 19, 1999 – The Shadow Insurance Regulation Committee issued three statements of consensus today, concerning commercial insurance deregulation, workers’ compensation benefits, and the impact of electronic commerce on insurance.

Commercial Insurance Deregulation. “Unfortunately, the reality of regulatory reform has fallen short of its vision. The changes enacted by the various states are uneven and inadequate, impeded by bureaucratic inertia and special interests that seek to insulate themselves from competition. The failure to implement a rational and harmonious system of commercial insurance regulation will strike a severe blow to state-based regulation. The easing of regulatory restrictions should extend as far as possible. Prior approval rate and form regulation should be eliminated, filing requirements limited, and large buyers exempted based on reasonable and consistent criteria.”Click here to read the whole statement.

Electronic Commerce and Insurance. “The growing importance of electronic commerce represents a watershed event for insurance markets and institutions. Overall, the Internet will significantly enhance the efficiency of insurance markets and institutions and benefit consumers by lowering costs. By enhancing the informational efficiency of insurance markets, e-commerce provides yet another compelling reason for insurance price and policy form deregulation. The mantle of privacy is being increasingly used to justify cross-subsidies between all manner of interest groups. Continuation of this tactic promises to erode the many efficiency gains in the insurance market made possible by e-commerce.”Click here to read the whole statement.

Workers’ Compensation Benefits and Insurance. “Because employees ultimately bear the cost of benefits, appropriate restrictions on benefits are in the interest of workers. Debate over specific benefits and eligibility rules should focus on whether they are either too stringent or too generous compared to what workers are willing to pay. Regulatory rate suppression reduces the availability of coverage, produces cross-subsidies from low-risk to high-risk employers, dulls safety incentives for higher-risk employers, and reduces insurers’ incentives to provide loss control services.”Click here to read the whole statement.

The members of the Shadow Insurance Regulation Committee include its chairman, James Garven of Louisiana State University, Neil Doherty of the Wharton School of the University of Pennsylvania, Martin Grace of Georgia State University, Scott Harrington of the University of South Carolina, and Robert Klein of Georgia State University. CEI, a non-profit, non-partisan public policy group founded in 1984, is dedicated to the principles of free enterprise and limited government. CEI sponsors Shadow Committee activities, but the recommendations of the group are its own. For more information, please contact Emily McGee, director of media relations, at 202-331-1010, ext. 209.