Widely used test statistics for non-zero mean abnormal returns in short-horizon event studies ignore cross-firm variation in event effects. Cross-sectional regression analyses of abnormal returns often either ignore heteroskedasticity in model disturbances or ignore plausible implications of...

We demonstrate analytically that cross-sectional variation in the effects of events, i.e., in true abnormal returns, necessarily produces quot;event-inducedquot; variance increases, biasing popular tests for mean abnormal returns in short-horizon event studies. We show that unexplained...

We analyze abnormal premium growth surrounding changes in A.M. Best Company financial strength ratings for a large panel of property/casualty insurers during 1992-1999. Control group comparisons and regression estimates generally indicate economically and statistically significant premium...

Following Becker's (1993) suggestion that tests for discrimination should attempt to infer whether profits differ for products sold to minorities and nonminorities, this article tests the hypothesis that racial discrimination affects market prices of auto insurance in Missouri. Compared with...

This article analyzes alleged underpricing of general liability insurance prior to the mid-1980s liability insurance quot;crisis.quot; The theoretical analysis considers whether moral hazard and/or heterogeneous information for forecasting claim costs can cause some firms to price too low and...

This paper provides an overview of the rationale and options for federal intervention in insurance regulation. Despite a number of positive and incremental reforms throughout the past decade, several key aspects of state insurance regulation, including regulation of rates, rate classification,...

This paper provides estimates of the changes in premiums, average or expected out of pocket payments, and the sum of premiums and out of pocket payments (total expected price) for a sample of consumers who bought individual insurance in 2010 to 2012, comparing total expected prices before the...

This article discusses key issues that policymakers should consider when evaluating potential changes to U.S. insurance regulation in the aftermath of the financial crisis, including implications of both the Dodd-Frank Act and the Solvency II initiative in the European Union. Fundamental...

This study outlines the compelling case for widespread deregulation of property-liability insurance rates and forms.

The authors demonstrate how regulation intended to control costs can exacerbate cost growth by subsidizing high-risk activities and firms at the expense of low-risk activities and firms.