Close, but not quite. Most states have a statute which says "rates shall not be inadequate or excessive". Pretty much all rate filings I've seen include a return on equity (ROE) in their analysis, and states review that in light of above statute.
States have pretty broad powers and I could see them forcing a disgorgement if they felt so inclined.
Source: I was a state insurance regulator for the Alaska Division of Insurance for a few years
since you said you were a regulator, hope you don't mind another question.
This model seems to be doing a fairly good job keeping auto insurance costs under control. Is this regulatory model also being applied to health insurance ?
If yes, why isn't it controlling healthcare costs ?
I focused on property & casualty but yes, the statute usually applies to health insurance, and I think the ACA further codified it as a requirement.
While I haven't done a deep dive recently, I doubt health insurance administrative expenses and profit are the main driving factor in health insurance costs. Losses (utilization multiplied by price) are the main driving force. You can look up rate reviews at https://ratereview.healthcare.gov/ and probably view the entire filings on the state DOI website, altho these filings are usually not really as accessible as they should be.
Will let the parent reply but at a high level (at least for comprehensive insurance) there is a) a fairly competitive market (and comparison shopping is possible) for car repairs and b) a limit to the cost of a repair (the value of a new comparable car) that we don't / won't place on human lives.
I recall getting partial refunds from health insurance for a few years after the ACA was first enacted due to regulations about how much they can charge.
States have pretty broad powers and I could see them forcing a disgorgement if they felt so inclined.
Source: I was a state insurance regulator for the Alaska Division of Insurance for a few years