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We study whether digital technology streamlines the regulatory process and reduces the costs of complying with regulation. To identify the effect of digital technology on regulatory compliance costs, we leverage a quasi-experimental policy change which mandates the use of an internet-based flow management tool that enables insurers and regulators to exchange policy form and rate filing information. We find that digitization lowers the costs of complying with regulation. The average insurer per line of business and year in the highest quartile regarding the proportion of business under the mandate saves 5.4 percent of general expenses. Our results also suggest a fixed cost of adopting the technology, with larger cost-saving accruing to firms that adopt the new technology more widely.

Aging (senescence) is characterized by the development of numerous pathologies, some of which limit lifespan. Key to understanding aging is discovery of the mechanisms (etiologies) that cause senescent pathology. In Caenorhabditis elegans a major senescent pathology of unknown etiology is atrophy of its principal metabolic organ, the intestine. Here we identify a cause of not only this pathology, but also of yolky lipid accumulation and redistribution (a form of senescent obesity): autophagymediated conversion of intestinal biomass into yolk. Inhibiting intestinal autophagy or vitellogenesis rescues both visceral pathologies, and can also extend lifespan. This defines a disease syndrome leading to polymorbidity and contributing to late-life mortality. Activation of gut-to-yolk biomass conversion by insulin/IGF-1 signaling (IIS) promotes reproduction and senescence. This illustrates how major, IIS-promoted senescent pathologies in C. elegans can originate not from damage accumulation, but from continued action of a wild-type function (vitellogenesis), consistent with the recently proposed hyperfunction theory of aging.

This paper provides a detailed description of a new measure of reserve error, the Full Information Reserve Error (FIRE), which was first proposed by Grace and Leverty (2018). We briefly describe the philosophy of FIRE and its advantages. We then present the details on how to calculate it. We also provide a link to a data set providing FIRE for the years 1990-2014.

We identify the effect of public guarantees on market discipline by exploiting the rich variation in U.S. state guarantees of property-liability insurer obligations. We find government guarantees significantly reduce the sensitivity of premium growth to changes in financial strength ratings, and that this reduced sensitivity applies to both price and volume changes. The effects are concentrated among insurers rated A- or lower by A.M. Best, the leading financial strength rating agency in the insurance industry. For downgraded insurers, we find that premium growth in business not covered by state guarantees falls in relation to growth in its covered business, with the estimate of the difference being as high as 15% for A- rated insurers and 10% for insurers rated below A-.

A vast majority of insurers are regulated by each state in which they conduct business; however, a small subset of specialized firms, risk retention groups (RRGs), are largely exempt from most aspects of duplicative regulation no matter how many states they operate. This article analyzes the differences between RRGs and standard insurers specializing in commercial liability insurance to determine the cost of duplicative regulation. The costs associated with multi‐state regulation are significantly higher than those for single‐entity regulation. These high regulatory compliance costs reduce the technical efficiency of firms, deter firms from operating in additional states, and increase the price of insurance.

The focus of this article is the aberrant student comment, the comment that generates scalding heat, but no light. We focus on those comments because we believe it is time to expose a deeply disturbing aspect of the student ratings process at its worst: it allows students to use the ratings process to abuse and bully a professor with no responsibility for the consequences of their actions. We believe that the aberrant and ugly comments on student ratings arise synergistically from two sources: (1) students’ metacognitive deficiencies, specifically the phenomenon known as the "Dunning-Kruger effect"; and (2) specific factors that have a particular effect on ratings of legal writing professors. Using psychological research on metacognition, the authors argue that metacognitive deficiencies in novice learners prevent them from recognizing their own poor performance and from recognizing their professor’s competence. This phenomenon, when coupled with the persistent institutional biases against legal writing professors, can damage a teacher’s career. Research into metacognition offers the legal academy a way to rethink the use of the standard student evaluation form and find ways to solicit more reliable and meaningful feedback from our students.

This paper examines whether managers impact firm performance when it is arguably needed most—during times of distress. We conservatively define managerial ability as the manager’s capacity to deploy the firm’s resources. We verify the validity of our metric using a manager-firm matched panel data set which allows us to track managers (CEOs) across different firms over time. Manager fixed effects are highly related to our measure of managerial ability. We then document that the ability of managers inversely influences the amount of time a firm spends in distress, the likelihood of a firm’s failure, and the cost of failure. These results overturn prior findings and suggest that managers of failed firms are less skilled than their counterparts.

We investigate the role of organizational structure in financial services markets by examining the U.S. life insurance industry. Traditionally, stock and mutual life insurers were equally represented, but now the industry is mainly composed of stock firms. We find operational efficiency, access to capital, and tax savings are important determinants for this shift. The incentive to demutualize differs by the type of conversion: full demutualization is chosen for efficiency and access to capital reasons and partial conversion, using a mutual holding company, is chosen for tax savings. Firm operational efficiency improves after conversion. We also find the efficiency of the stock organizational form dominates that of the mutual structure during our sample period, 1995 to 2004.

This paper examines the effect of rate regulation on the management of the property-liability insurer loss reserve. The political cost hypothesis predicts that managers make accounting choices to reduce wealth transfers resulting from the regulatory process. Managers may under-state reserves to justify lower rates to regulators. Alternatively, managers may have an incentive to report loss inflating discretionary reserves to reduce the cost of regulatory rate suppression. We find insurers over-state reserves in the presence of stringent rate regulation. Investigating the impact along the conditional reserve error distribution, we discover that a majority of the response occurs from under-reserving firms under-reserving less because of stringent rate regulation.

We evaluate the two main methods to measuring property-liability insurer efficiency: the production and "flow" (or financial intermediation) approaches. The two approaches are not mutually consistent and thus potentially yield different answers to tested hypotheses. The production approach is more closely related to traditional measures of firm performance — return on assets, return on equity, and expense to premium ratio. In addition, efficient production approach firms are generally significantly less likely to fail, while firms characterized as efficient by the flow approach are generally more likely to fail. Further, we test output definitions and find the theoretical concern regarding the production approach's use of losses as a measure of output is not validated empirically.