Many thanks to Credit Slips for providing me with the opportunity to discuss some of the key consumer protection issues in insurance regulation. As I hope I have shown over my short stint here, there is much that needs to be done in this important area, which often receives less attention from academics and the press than consumer protection in credit.
I thought I would close by offering a simple set of recommendations for dramatically improving consumer protection in property/casualty insurance markets. Here is my basic recipe, which would need to be separately implemented for each line of coverage:
(1) Promulgate a single policy that serves as a minimum baseline of coverage.
(2) Develop "nutritional labels" geared towards providing consumers with a basic sense of the degree to which a carrier's policy provides greater coverage than the minimum baseline.
(3) Require prominent disclosure on the nutritional labels of several measures of claims paying quality, such as the percentage of claims denied, the average time within which claims are paid, and the frequency of non-renewal or cancellation within a year of a claim being submitted.
(4) Require full online disclosure of insurance policies, variables relating to claims payment, and data regarding the availability of coverage.
(5) Carefully consider the need to regulate risk classifications that have a disparate impact on underserved communities.
(6) Abandon all price regulation designed to suppress insurance rates, so long as a reasonable number of carriers exist in the marketplace.
(7) Promote the importance of independent insurance agents, but prohibit these agents from receiving different amounts of compensation based on the carrier with which they place consumers.