R Street Institute Releases 11th Insurance Regulation Report Card
Today, the R Street Institute released the 11th edition of its Insurance Regulation Report Card. The report evaluates the effectiveness of property and casualty insurance regulation across all 50 states.
The report, authored by R Street Finance Insurance and Trade Policy Director Jerry Theodorou, uses seven objective metrics to assign a letter grade to each state. The categories are: solvency regulation, underwriting freedom, residual markets, fiscal efficiency, politicization, auto insurance market competitiveness, and homeowners insurance market competitiveness.
This report is a valuable resource for policymakers, regulators, industry leaders, and consumers. It highlights areas where states excel and identifies opportunities for reform, particularly in modernizing regulations to encourage innovation and reduce market inefficiencies.
The author adds, “[a]t a time when critics of the insurance industry are arguing for greater federal involvement in insurance regulation, our study demonstrates that the state-based insurance regulatory infrastructure is doing its job, and doing it well. Insurance company failures are rare.”
The full report is available to read and download here.
KEY FINDINGS:
- Insurance regulators are tasked with two overarching goals: policyholder protection, and maintaining solvency of insurers operating in their state. Our research shows that in an overwhelming number of states this dual function is executed competently.
- States that earned high grades demonstrated low politicization, significant underwriting freedom, competitive homeowners markets, and protected consumers from excessive regulations and high tax and fee burdens, among other challenges.
- In certain states there is more emphasis on policyholder protections. When this is at the expense of maintaining insurer solvency, insurers may pull up roots and take their capital to other states’ markets.
- The property and casualty insurance industry is highly competitive. No state has a concentration of insurers, giving policyholders ample choice.
METHODOLOGY:
The methodology employed in this report was modified somewhat from prior years for increased transparency and simplification. The author focuses the analysis on property and casualty insurance because these lines of business most directly affect people’s personal finances. These also tend to be the lines of business more subject to legislative and regulatory interventions.
For each of the seven categories, the author used the most recent data available (year-end 2023 in most cases) wherever relevant and available. The two factors given the greatest emphasis in the grade calculation—solvency regulation and underwriting freedom—are the conditions that the author believes most strongly influence states’ abilities to promote healthy, competitive markets.
GRADES:
Alabama—C
Alaska—D
Arizona—A-
Arkansas—A-
California—D+
Colorado—B
Connecticut—B
Delaware—C
Florida—B
Georgia—B
Hawaii—F
Idaho—B
Illinois—A-
Indiana—A-
Iowa—D+
Kansas—B
Kentucky—A
Louisiana—D+
Maine—A-
Maryland—C
Massachusetts—A
Michigan—B
Minnesota—D+
Mississippi—D
Missouri—A-
Montana—C
Nebraska—B
Nevada—B
New Hampshire—B
New Jersey—D
New Mexico—A+
New York—D
North Carolina— F
North Dakota—C
Ohio—C
Oklahoma—A-
Oregon—A
Pennsylvania—C
Rhode Island—D+
South Carolina—A
South Dakota—A-
Tennessee—B
Texas—C
Utah—B
Vermont—A-
Virginia—A
Washington—D+
West Virginia—C
Wisconsin—C
Wyoming—A+
PREVIOUS INSURANCE REGULATION REPORT CARDS:
2022 Insurance Regulation Report Card
2020 Insurance Regulation Report Card
2019 Insurance Regulation Report Card
2018 Insurance Regulation Report Card
2017 Insurance Regulation Report Card
2016 Insurance Regulation Report Card
2015 Insurance Regulation Report Card
2014 Insurance Regulation Report Card
2013 Insurance Regulation Report Card
2012 Insurance Regulation Report Card
ABOUT THE AUTHOR
Jerry Theodorou is director of the R Street Institute’s Finance, Insurance, and Trade Policy Program. Theodorou contributes to the public policy debates by developing and advancing effective free-market public policy solutions to complex issues where federal and state governments have intervened.
ABOUT THE R STREET INSTITUTE
As a free-market, free-enterprise public policy organization, the R Street Institute favors competitive markets over markets with regulatory overreach and excessive or redundant regulation. To that end, our motto is “Free markets. Real solutions.”