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- Title
The Effect of Proposition 103 on Insurers: Evidence from the Capital Market.
- Authors
Szewczyk, Samuel H.; Varma, Raj
- Abstract
In May 1989, the California Supreme Court upheld Proposition 103, an insurance reform measure mandating large cuts in property-liability insurance rates. However, the court also ruled that the regulation proposed by Proposition 103 may not deny insurers an adequate return. This study examines the effect of Proposition 103 on the common stock values of property-liability insurers around both the passage of the measure in the 1988 election and the court decision in 1989. The results indicate that the capital market believes Proposition 103 to be an unfavorable development for insurers.
- Subjects
CALIFORNIA; INSURANCE law; PROPERTY insurance -- Rates; LIABILITY insurance; INSURANCE rates; INSURANCE policies; LEGAL judgments; INSURANCE companies; CALIFORNIA. Supreme Court; RATES
- Publication
Journal of Risk & Insurance, 1990, Vol 57, Issue 4, p671
- ISSN
0022-4367
- Publication type
Article
- DOI
10.2307/252952