Rethinking Consumer Protection Regulation in Insurance Markets

This paper examines consumer protection regulation in insurance markets and discusses how regulation could be made more efficient and robust. The paper argues that regulatory costs could be lowered and effectiveness enhanced by better targeting regulations to address market failures. Regulations should also recognize and attempt to harness the private incentives of market participants to encourage behaviors that are consistent with regulatory objectives. Applying theoretical and empirical insights from academic research and the experiences of other jurisdictions, specific approaches that make use of these principles are discussed.