TITLE
"Environmental Factors Influencing the Rates of Property-Liability
Insurer Insolvencies," Journal
of Insurance Issues, Paul M. Kazenski, Kenneth
M. Scoles, and William R. Feldhaus. March 1995, Vol. XVIII, No.
1, pp. 1-22.
ABSTRACT
Prior insolvency studies have focused on establishing a single criterion, developed from
firm-specific data, to identify financially troubled insurers. None has explicitly
considered the potential influence of the regulatory environment on insurer insolvency.
The objective of this study is to determine if environment factors, particularly
regulation, dependent variable (statewide insolvency rate) are employed: a simple
frequency and a new metric based upon the probability associated with the upper bound of a
confidence interval computed at a .10 significant level. Statistical tests indicate an
inverse relationship between regulatory and insolvency. Additional evidence is provided
that suggests the relationship is non-linear.
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