WASHINGTON (Dec. 13, 2016) – For the second year in a row, the R Street Institute finds that Vermont has the best regulatory system for insurance and that North Carolina has the worst, according to the fifth edition of R Street’s Insurance Regulation Report Card.

Written by R Street Senior Fellow R.J. Lehmann, the annual report grades each state across seven dimensions on the basis of how effectively and efficiently they discharge their duties to monitor insurer solvency and to foster consumer choice and competitive, private insurance markets.

“We believe states should regulate only those market activities where government is best-positioned to act; that they should do so competently and with measurable results; and that their activities should lay the minimum possible financial burden on policyholders, companies and, ultimately, taxpayers,” Lehmann writes.

For the third straight year, Vermont had the best insurance regulatory environment in the United States, receiving the only “A+” score. Other states receiving either an “A” or “A-“ were Arizona, Idaho, Illinois, Kentucky, Maine, New Hampshire, Utah and Wisconsin.

Meanwhile, for the second straight year, North Carolina had the worst score, receiving a failing grade for the third year in a row. States in the “D” range include Alaska, Massachusetts, California, Hawaii, Louisiana, Mississippi, Delaware, Montana, North Dakota and New York.

Among the most significant shifts Lehmann noted in the report is the continued expansion of North Carolina’s two property insurance residual market entities, even as Florida’s Citizens Property Insurance Corp.—previously the nation’s largest residual market entity—continues to shrink rapidly.

“Not coincidentally, when R Street issued its first regulation report card in 2012, Florida ranked dead last and North Carolina was somewhere in the middle. This year, North Carolina is dead last and Florida is somewhere in the middle,” Lehmann wrote.

The full report, including an explanation of the methodology behind the ratings, is available HERE.