Sunday, January 21, 2007

Automotive Insurance

The US automotive insurance market is, contrary to what many believe, one of the most highly regulated around. Almost all of the States have their own insurance regulator and all are continually intervening in the market to insist upon the type of coverage allowed, the priocing, the no claims bonuses and even how it is priced geographically.

This has the sad side effect of limiting the ability of companies to compete upon price: it is also true that many companies have pulled out entirely from some of the most over-regulated States, to the detriment of the consumers.

What this means is that there's an awful lot of non-price competition (a more wasteful and less efficient kind of competition, of course). Geico, for example, produces a series of guides to things like teenage driving. It's great information, very useful, packed full of good advice.

It's just that if there weren't the restrictions on competition by price consumers might be even better off.

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