The name is absent

tion, California regulators started to not allow using zip codes as one of the factors
to price car insurance any more. Given that territory is one of the most predictable
independent variables in the premium prediction model, such regulation forced most
insurers to reprice their car insurance products in California, and it added significant
uncertainties for the car insurance companies’ risk management.

The Gramm-Leach-Bliley Act in 1999

In 1999, U.S. government passed the GLB Act, and the purpose of such Act is
to reduce the barriers among insurance companies, commercial banks and broker-
age firms. Such barriers were set by several Acts throughout the history: In 1916,
congressional passage of the National Banking Act prohibited national banks from
selling insurance in any location where the population exceeded 5,000 inhabitants.
In 1934, as a consequence of the Great Depression, the passage of the Glass-Steagall
Act further separated the banking and insurance industry by stringently segmenting
the whole financial industry into separate and unique insurance, banking, and invest-
ment sectors. In the following years, passages of additional legislation such as the
Bank Holding Company Act and the Garn-St. Germain Act created a more awkward
system of regulation among the sectors.

In the past two decades, these regulatory barriers restricting financial integration
have been challenged in the courts and in the legislature. In 1998, the 105th Congress
nearly succeeded in repealing Glass-Steagall Act when the House narrowly passed HR

<<   18   19   20   21   22   23   24   >>

More intriguing information