The Effect of Regulation on Insurance Pricing: The Case of
                    Germany

The Effect of Regulation on Insurance Pricing: The Case of Germany

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Article ID: iaor2012721
Volume: 79
Issue: 1
Start Page Number: 129
End Page Number: 164
Publication Date: Mar 2012
Journal: Journal of Risk and Insurance
Authors: ,
Keywords: Germany, insurance, regulation
Abstract:

This article analyzes the impact of policy form regulation on the unit price of insurance and determinants of premium changes using the 1994 deregulation of the German property–liability market as a natural experiment. Our result show that policy form regulation did not increase prices above competitive levels. Factors influencing premium changes are significantly different for the two time periods, pre‐ and post‐deregulation, indicating that regulation affects insurance pricing. Focusing on highly competitive lines after deregulation, we find a significant price decrease, and this decrease is offset by higher prices in the remaining other lines.

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