REGULATION AND INSURER COMPETITION - DID INSURERS USE RATE REGULATIONTO REDUCE COMPETITION

This article examines rate regulation and the market share of insurers using exclusive agents, known as direct writers. Direct writers have lower market share in rate regulation states; however, the effect is o bserved in both the regulated automobile lines and the less regulated homeowners' insurance. This suggests that statute implementation and n ot the statue itself affects insurers' market shares. Including measur es of the political influence of insurers using nonexclusive agents an d that of their agents on regulators in estimation removes the associa tion between regulation and direct writers' market share. Combined wit h the different parties' support for regulation, the results indicate that nonexclusive agents used political influence to slow direct write rs' growth.