Article by George L. Priest
Part I of this Article describes the structure of the commercial casualty insurance industry. It discusses evidence of general competitiveness within the industry, and it documents the dramatic shift toward self-insurance that appears to have begun in the early 1970s. Part II applies this understanding of industry structure to an analysis of the specific antitrust claims of the Attorneys General. Part II shows the link between the withdrawal of pollution, defense cost, and occurrence coverage and the broader changes in industry structure since the 1970s. It also explains why the withdrawal of these forms of coverage, although limited in impact, more likely expanded, rather than contracted, insurance availability. This discussion strongly implies that the Attorneys' General complaints about insurer practices, besides lacking antitrust merit, are particularly adverse to the broad social desire to expand the availability of insurance and to lower insurance prices. Next, Part III considers the Ayres-Siegelman exclusionary hypothesis of the coverage withdrawals. This Part shows why structural conditions of the industry make any effort to raise rivals' costs impractical. Finally, Part IV describes how future policies toward the industry must be defined more broadly to facilitate the provision of insurance and increase insurance availability, especially to lowrisk insureds (such as those persons with low income) to whom insurance might otherwise be denied.
About the Author
George L. Priest. John M. Olin Professor of Law and Economics, Yale Law School.
Citation
63 Tul. L. Rev. 999 (1989)