Avoiding the risks of regulatory red tape

Research

Avoiding the risks of regulatory red tape

Professor Philip Booth

15 June 2018

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https://iea.org.uk/wp-content/uploads/2018/06/AVOIDING-THE-RISKS-OF-REGULATORY-RED-TAPE-2-web.pdf

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Press release

Summary:

The extent of regulation of insurance companies has grown significantly in
recent decades.

The ‘freedom with publicity’ regime which defined the regulatory approach
from 1870 to 1970 appeared to work and ran with the grain of the market.

Arguments that are given today for prudential regulation of insurers tend
to be spurious or not well founded.

Much government regulation of insurance companies is unlikely to achieve
its declared objective and might even encourage problematic behaviours
within insurance markets.

Regulation to ensure good governance and good information flows to
markets may have some benefits and is less likely to cause the problems
that other forms of regulation create.

A case can be made for regulation designed to promote the objective of
consumer protection. However, all the benefits of such regulation can be
achieved with far fewer costs by creating a voluntary system of government
regulation. Whether an insurance policy was written by a company which
was part of the government regulatory system should be very clear to
consumers at the point of sale.

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Philip Booth

Philip Booth is Senior Academic Fellow at the Institute of Economic Affairs. He is also Director of the Vinson Centre and Professor of Economics at the University of Buckingham and Professor of Finance, Public Policy and Ethics at St. Mary’s University, Twickenham. He also holds the position of (interim) Director of Catholic Mission at St. Mary’s having previously been Director of Research and Public Engagement and Dean of the Faculty of Education, Humanities and Social Sciences. From 2002-2016, Philip was Academic and Research Director (previously, Editorial and Programme Director) at the IEA. From 2002-2015 he was Professor of Insurance and Risk Management at Cass Business School. He is a Senior Research Fellow in the Centre for Federal Studies at the University of Kent and Adjunct Professor in the School of Law, University of Notre Dame, Australia. Previously, Philip Booth worked for the Bank of England as an adviser on financial stability issues and he was also Associate Dean of Cass Business School and held various other academic positions at City University. He has written widely, including a number of books, on investment, finance, social insurance and pensions as well as on the relationship between Catholic social teaching and economics. He is Deputy Editor of Economic Affairs. Philip is a Fellow of the Royal Statistical Society, a Fellow of the Institute of Actuaries and an honorary member of the Society of Actuaries of Poland. He has previously worked in the investment department of Axa Equity and Law and was been involved in a number of projects to help develop actuarial professions and actuarial, finance and investment professional teaching programmes in Central and Eastern Europe. Philip has a BA in Economics from the University of Durham and a PhD from City University.