The Quality of Insurance Intermediary Services – Empirical Evidence for Germany

Eckardt, Martina and Räthke-Döppner, Solvig (2008): The Quality of Insurance Intermediary Services – Empirical Evidence for Germany.

Abstract

Insurance intermediaries help consumers to economize on information and transaction costs in insurance markets. However, competing insurance intermediaries provide heterogeneous services, which are difficult to assess by incompletely informed consumers. Transaction costs economics, search theory and principal agent theory provide arguments on product quality differences between the two main distribution channels in insurance markets (exclusive agents vs. independent intermediaries). The present paper uses a sample of 927 insurance intermediaries in Germany. By performing OLS estimations we test the impact of the different distribution channels, but also of other factors relating to the information processing activities on intermediaries’ service quality. Depending on the proxies used for service quality, we find mixed evidence for the “product quality” hypothesis according to which independent intermediaries provide better service quality than exclusive agents. We find that service quality depends also to a large extent on the information gathering and processing activities of the individual intermediaries.

• Item Type: MPRA Paper
• Language: English
• Keywords: Insurance Distribution Channels, Service Quality
• Subjects: D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior ; Transaction Costs ; Property Rights; G - Financial Economics > G2 - Financial Institutions and Services > G22 - Insurance ; Insurance Companies ; Actuarial Studies; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search ; Learning ; Information and Knowledge ; Communication ; Belief ; Unawareness; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L15 - Information and Product Quality ; Standardization and Compatibility

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