Regulation as Contract Enforcement
Alan D. Morrison, Saïd Business School,
University of Oxford
Debating the minutiae of insurance regulation
without a clear understanding of why insurance companies are regulated is
futile. In this non-technical essay I discuss the economic rationale for
insurance business regulation. I conclude that the appropriate role of the
regulator in this industry is to enforce contracts which would otherwise be
broken. This implies that regulation should be optional, and that regulation
need not be a monopoly activity.
KEY WORDS: Insurance regulation, contract
JEL CLASSIFICATION: G22, G28.
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