The number of title insurance companies operating in State Z is relatively low.Recently,the largest of these companies (50 percent market share)acquired the second largest company (30 percent market share).Immediately after the acquisition,the insurer raised premiums by 75 percent.This scenario demonstrates which of the following rationales for the regulation of insurance?

Question

Quizplus · Accepted Answer

The insurer's action of raising premiums by 75 percent immediately after the acquisition of the second largest company shows that they have significant market power, which could lead to monopolistic behavior. Thus, the scenario demonstrates the need for regulation to ensure reasonable rates for consumers.

The Number of Title Insurance Companies Operating in State Z