7. Regulation and the Impact of Regulatory Dynamics on Insurance Markets.
The regulatory environment in which insurance markets operate has been a focus of historical inquiry in many countries. Regulation in various forms has had an impact on the structure, conduct and performance of insurers across the spectrum. At times these effects may have been positive, encouraging the expansion of the industry. At other times they may had had negative impacts inhibiting the growth of a well-functioning market. The rationale for the introduction of regulatory requirements has varied. Arguments FOR have emphasized potential market power, consumer protection, quality standards, market stability and the promotion of broader economic objectives. Arguments AGAINST have referred to the efficacy of free market outcomes and the promotion of competition. Not all forms of regulation have been mandated or imposed by government. Self-regulation, has been a feature of major insurance markets. This has manifested in collusive agreements such as those policed by the U.K. Fire Office Committee in the nineteenth and twentieth centuries. More indirect forms of regulatory behaviour have been an outcome of the growth of mutual insurers with a vested interest in protecting the interest of policyholders. In the last quarter of the twentieth century, financial sector deregulation has been a mantra adopted by many governments and this has had direct and indirect impacts on insurance markets. The rise and fall of bancassurance is a case in point. The turbulence after the Global Financial Crisis introduced another regulatory dimension affecting the insurance industry world-wide. This session aims to investigate the many and varied connections between regulation and risk. It will also consider the broader implications regulatory issues for insurance markets.
Key questions that could be addressed are: What impact has growing insurance market regulation had on risk? Has risk been mitigated by increased State regulation? To what extent has the insurance industry contributed to higher regulatory prevalence? What are the sources of increased regulation, in which areas of risk has regulation escalated and why? What has been the impact of private as opposed to public regulation? What do we know about the types of regulation: prudential, competitive, consumer protection and their impact? What of influence of regulatory externalities (the effects of regulation on other financial sector institutions) and their implications for the development of insurance markets? What do we know about the regulatory cycles and their implications? How has financial sector deregulation changed the market environment and impacted on risk? This session would also welcome other investigation which highlights the impact of regulation on the nature of risk and broader implications which enhance our understanding of the history and development of insurance markets.
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