Abstract
Excess profits statutes in six states require automobile insurers to return excess profits, if any, to their policyholders. This article discusses the issues that must be resolved in drafting and implementing an excess profits statute. For example, what is the long-run reasonable rate of return? What allowance should be made for short-run fluctuations around the reasonable rate of return? The article also examines carefully the only two statutes (Florida and New York) that have been implemented to date. Finally, it presents the cases for and against excess profits statutes as a supplement to existing forms of property and liability insurance rate regulation.
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