What is it about?
Hungarian (and probably many other) insurers try to attract new costumers by setting for them lower premiums. The consequence of this practice, that a loyal consumer of the insurer can pay significantly higher premium for a similar car, than a new one. Many politician demand a regulation, that the premium for new consumer won't be lower, than for old one. Questionable whether this competition-reducing regulation's overall benefit is higher, than the original high-competition solution's.
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Why is it important?
The regulators like to regulate these and similar problems without an economic theory behind it, on the basis of simple sentiments. The result can be the opposit than expected.
Perspectives
The author was responsible about insurance regulation at Hungarian Financial Supervisory Authority, and have tried to make theoretical basis for this and similar problems.
József Banyár
Read the Original
This page is a summary of: Should regulation help ‘lazy’ customers? – Regulation alternatives on the Hungarian third-party motor liability market, European Competition Journal, September 2015, Taylor & Francis,
DOI: 10.1080/17441056.2015.1129865.
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