WASHINGTON (June 4, 2012) – The R Street Institute, a new national non-profit public policy think tank dedicated to free markets and real solutions, today released its first research publication as an independent organization, a report card grading the insurance regulatory environments in each of the 50 states.

Authored by R Street Public Affairs Director R.J. Lehmann, the report card measures states on 14 objective variables to gauge the extent to which their insurance regulatory environments embody the principles of limited, effective and efficient government.

“As the largest U.S. industry regulated primarily at the state level, insurance offers a natural experiment to judge how different policy approaches impact consumers and markets,” Lehmann said.  “We believe that states should do only those things governments do best, that it should do them well and that it should do them efficiently. We think the data shows that states that take this approach foster competitive private markets where consumers are free to buy the broadest range of products.”

R Street measured states on the concentration of their home and auto insurance markets and relative size of their residual markets; the effectiveness of state solvency and fraud regulation; the transparency and politicization of insurance regulation; the tax and fee burdens placed on insurance markets and the proportion of fees used to support insurance regulation; and the relative freedom granted to insurers to set risk-based rates, including through the use of credit and territorial information.

Based on these metrics, Vermont had the best property and casualty insurance regulatory environments in the U.S. this year, rating more than two standard deviations above the mean with 28 out of a maximum possible 55 points. It was followed by Illinois and Ohio, with 21 and 19 points respectively.

Only one state, Florida, received a failing grade, falling more than two standard deviations below the mean.  Other states falling more than one standard deviation below the mean include New York, California, Massachusetts and Texas.

“Overall, in 2011 and early 2012, we saw continued modest trends toward greater consumer and business freedom in the homeowners and automobile insurance markets, as well as real efforts in some states to scale back, or otherwise place on more sound financial footing, residual insurance markets and state-run insurance entities,” Lehmann said. “Those are positive trends, and we hope this report card encourages other states to move forward in that direction over the next year.”

The report can be found on R Street’s website. For more information, contact R.J. Lehmann at 202-525-5726 or [email protected].

R Street is a non-profit public policy research organization that supports free markets; limited, effective government; and responsible environmental stewardship.  It has headquarters in Washington, D.C. and branch offices in Tallahassee, Fla.; Austin, Texas; and Columbus, Ohio. R Street’s co-founders previously were the staff of the Heartland Institute’s Center on Finance, Insurance and Real Estate.


Featured Publications