For the past four years, The Heartland Institute has graded states on their property and casualty insurance regulatory environment. In assigning grades in its 2011 report, study author and Heartland Institute Vice President of Washington, DC Operations Eli Lehrer looks at how free consumers are to choose the P&C insurance products they want as well as how free insurers are to provide the P&C insurance products consumers say they want.
Lehrer notes in his study that there is a modest, uneven, but nonetheless real trend towards more freedom for consumers and businesses in the homeowners' and automobile insurance realms. He said that lthough state-level insurance bureaucracies make it difficult—sometimes impossible—for insurers to offer consumers the products they need, want, and deserve, burdensome regulation shows signs of easing.
Below and on the following pages are the top 10 states for P&C insurance regulation, including their grade, overall score, and the reasoning behind the state's ranking.
Vermont comes in first on Heartland's report card for the third year out of four. The state has both a very good regulatory environment for insurers (market entry is so easy that almost every national insurer competes there) and an open and competitive market that provides enormous choice to for Vermont consumers.
Long a favorite of many in the insurance industry, Ohio has shot up in the rankings since Heartland began doing the report card largely because of improvements in regulatory clarity under former commissioner Mary Jo Hudson. For a state with so many sizeable domestic carriers (which often tend to dominate in their own back yards) Ohio offers a very competitive insurance environment for consumers.
Illinois' no-file system for most P&C rates makes it a favorite of many in the insurance industry. Because the system does allow for a great deal of freedom, Illinois gets a good grade. But the market dominance of a few large carriers domiciled in the state stop it from topping Heartland's ratings.
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