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

This scenario demonstrates the need for insurance rate regulation to ensure that premiums remain reasonable for consumers, especially in a market with limited competition. The significant increase in premiums after the acquisition suggests that the insurer may be taking advantage of its dominant market position. Therefore, insurance regulation can help protect consumers from potential price gouging by insurers.

The Number of Title Insurance Companies Operating in State Z