Policy Studies Insurance

2014 Insurance Regulation Report Card

Since it opened its doors two years ago, R Street has issued an annual Insurance Regulation Report Card. This is the third edition of our annual examination of which states do the best job of regulating the business of insurance. R Street is dedicated to the mantra: “Free markets. Real solutions.” Toward that end, the approach we apply is to test which state regulatory systems best embody the principles of limited, effective and efficient government. In this context, that means 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.

There are three fundamental questions this report seeks to answer:

  1. How free are consumers to choose the insurance products they want?
  2. How free are insurers to provide the insurance products consumers want?
  3. How effectively are states discharging their duties to monitor insurer solvency, police fraud and consumer abuse and foster competitive, private insurance markets?

For this year’s report, we have adjusted the weightings of some categories and incorporated new data sets into our analysis. Most notably, we have added new sections analyzing the resources state insurance departments set aside to respond to consumer complaints, as well as states’ efforts to modernize their regulatory apparatus through such efforts as reform of reinsurance collateral rules and participation in the Interstate Insurance Product Regulation Commission. We also have refined our analysis of states’ fraud-fighting resources to better measure the degree to which they are prepared to respond to levels of suspected fraud reported in each state. Finally, both in order to more equitably balance the 12 macro rating categories this report tracks, and to provide more intuitive final scores, we have weighted the categories so as to track with a scale of zero to 100.

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