TY  - JOUR
AU  - Bradford, David F
AU  - Logue, Kyle
TI  - The Effects of Tax-Law Changes on Property-Casualty Insurance Prices
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5652
PY  - 1996
Y2  - July 1996
DO  - 10.3386/w5652
UR  - http://www.nber.org/papers/w5652
L1  - http://www.nber.org/papers/w5652.pdf
N1  - Author contact info:
David F. Bradford
E-Mail: N/A user is deceased

Kyle Logue
E-Mail: klogue@umich.edu
M1  - published as David F. Bradford, Kyle Logue. "The Effects of Tax Law Changes on Property-Casualty Insurance Prices," in David F. Bradford, editor, "The Economics of Property-Casualty Insurance" University of Chicago Press (1998)

AB  - During the 1980s, the federal income tax treatment of property-casualty insurers and their policyholders underwent several important changes, the most significant of which came in 1986. This paper develops theoretical predictions for how these changes should have affected the equilibrium prices of property-casualty insurance policies, and explores the extent to which the theoretical predictions are reflected in data on industry experience.  The paper is devoted mainly to a careful specification of the income tax rules, and to deriving the connection between predictions about simple forms of insurance policy and industry data on premiums earned.   Although the predicted impact of the changes in the tax rules enacted in 1986 translates into a tax on premiums (net of the cost of acquisition) of up to 13 percent (on medical malpractice, the longest-tail line of insurance, in 1987), it is small relative to the variability of the actual loss experience.
ER  -