Controlling Automobile Insurance Costs

John Cummins and Sharon Tennyson

Journal of Economic Perspectives, 1992, vol. 6, issue 2, 95-115

Abstract: We begin by providing an overview of the auto insurance system and the structure of the auto insurance market. We then turn to an analysis of the factors underlying the auto insurance price increases experienced in recent years. We find that the auto insurance inflation of the 1980s was caused primarily by increases in cost factors, especially inflation in the severity of personal injury claims. There is no persuasive evidence that increasing profit rates or expense loadings contributed to inflation in premiums. The paper concludes with recommendations for bringing costs under control.

JEL-codes: G22 (search for similar items in EconPapers)
Date: 1992
Note: DOI: 10.1257/jep.6.2.95
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Citations: View citations in EconPapers (38)

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