Does the Product Quality Hypothesis Hold True? - Service Quality Differences between Independent and Exclusive Insurance Agents

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Does the Product Quality Hypothesis Hold True? - Service Quality Differences between Independent and Exclusive Insurance Agents

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Lucinda Trigo Gamarra () (University of Rostock)

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Lucinda Trigo Gamarra

Abstract

Insurance products are distributed both by independent and dependent agents, although the use of independent agents is more costly. The product quality hypothesis states that independent agents provide both insurers and customers with higher service quality and therefore, remain on the market. On the contrary, according to the market imperfections hypothesis both intermediary types offer the same quality, and only coexist due to information asymmetries. Having conducted a written survey, we measure service quality differences by multivariate regression analysis. Our analysis shows that the higher level of service quality of independent agents supports the product quality hypothesis. The result is a separating equilibrium on the market.

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Paper provided by University of Rostock, Institute of Economics, Germany in its series Thuenen-Series of Applied Economic Theory with number 76.

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Length: 21 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:ros:wpaper:76

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Find related papers by JEL classification:
G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies
L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

This paper has been announced in the following NEP Reports:

NEP-ALL-2007-04-21 (All new papers)
NEP-IAS-2007-04-21 (Insurance Economics)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Allen N. Berger & J. David Cummins & Mary A. Weiss, 1995. "The coexistence of multiple distribution systems for financial services: the case of property-liability insurance," Finance and Economics Discussion Series 95-22, Board of Governors of the Federal Reserve System (U.S.).
Other versions:
- Allen N. Berger & J. David Cummins & Mary A. Weiss, 1995. "The Coexistence of Multiple Distributions Systems for Financial Services: The Case of Property-Liability Insurance," Center for Financial Institutions Working Papers 95-13, Wharton School Center for Financial Institutions, University of Pennsylvania. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Lucinda Trigo Gamarra, 2007. "Single- versus Multi-Channel Distribution Strategies in the German Life Insurance Market: A Cost and Profit Efficiency Analysis," Thuenen-Series of Applied Economic Theory 81, University of Rostock, Institute of Economics, Germany. [Downloadable!]

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