AN ANALYSIS OF PROPERTY-CASUALTY INSURERS: State-specific Control Variables 5

INSERT TABLE 1

The descriptive statistics for the control variables show 39 percent of the sample is in rate regulated states, indicating the sample is disproportionately in the 25 states that do not regulate insurance rates. Twenty-seven percent of the sample is in the 14 states with no-fault automobile insurance. INSPOP ranges from 0.03 to 1.24, indicating wide variation in the number of insurers per state, after controlling for population. Twenty percent of the insurers are direct writers. Insurance company assets range from $1 million to $28 billion. The mean (median) insurer reports assets of $1 billion ($200 million). Statutory surplus averages one-third of total admitted assets. On average, equity, unoccupied real estate, and mortgage loans account for 14% of total invested assets. one hour payday loans

Univariate Analysis

Consistent with the annual statements being managed to reduce state taxes, Table 2’s Pearson correlation coefficients for PRICE and ETR and for PRICE and INCRATE variables are negative (-0.03) and significant at the 0.05 level. The correlation between PRICE and PREMRATE is not significantly different from zero.

Mean Std. Dev. Minimum 25% Median 75% Maximum
PRICE 1.61 0.59 0.50 1.18 1.56 2.01 3.00
ETR 0.015 0.005 0.006 0.012 0.015 0.018 0.028
INCDUM 0.10
EASYETR 0.002 0.006 0 0 0 0 0.03
PREMRATE 0.024 0.006 0 0.020 0.023 0.025 0.045
INCRATE 0.006 0.020 0 0 0 0 0.14
RATEREG 0.39
RESTRICT 26 15 1 13 27 41 51
NOFAULT 0.27
INSPOP 0.29 0.27 0.03 0.11 0.19 0.31 1.24
DIRWRITE 0.20
SIZE 19.2 1.7 13.9 17.9 19.1 20.4 24.0
CAPITAL 0.34 0.16 -0.24 0.24 0.31 0.40 1.00
PORTRISK 0.14 0.15 0 0.02 0.09 0.21 1.00

INSERT TABLE 2

The signs of the Pearson correlation coefficients between PRICE and every control variable, except PORTRISK, are consistent with prior findings. Contrary to expectations, the correlation between PRICE and PORTRISK is positive, though not significantly different from zero. The statistically significant correlations between the tax and control variables suggest that: (1) Rate regulated states are less likely to impose income taxes on insurers. (2) No-fault states have lower premium taxes and higher income taxes. (3) Premium (income) taxes are increasing (decreasing) in the number of insurers per capita.

PRICE ETR INCDUM EASYETR PREMRATE INCRATE
PRICE -0.03 -0.03 0.01 -0.01 -0.03
ETR -0.03 -0.23 0.11 0.47 -0.21
INCDUM -0.03 -0.23 -0.03 -0.23 0.95
EASYETR 0.01 0.11 -0.03 0.08 -0.03
PREMRATE -0.01 0.47 -0.23 0.08 -0.21
INCRATE -0.03 -0.21 0.95 -0.03 -0.21
RATEREG -0.04 0.00 -0.11 0.01 0.00 -0.05
RESTRICT -0.04 0.01 0.03 0.01 0.02 0.09
NOFAULT -0.03 -0.24 0.21 -0.03 -0.17 0.25
INSPOP -0.01 0.15 -0.20 0.03 0.07 -0.18
DIRWRITE -0.02 -0.02 -0.01 0.14 -0.04 -0.02
SIZE -0.06 -0.02 -0.01 -0.18 -0.00 0.01
CAPITAL 0.06 0.02 0.01 0.23 0.03 -0.00
PORTRISK 0.02 0.02 -0.00 0.05 0.02 0.00