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EU intermediary regulation and its impact on insurance agent quality: Evidence from Germany

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  • Lex, Christoph
  • Tennyson, Sharon

Abstract

Implementation of the EU Directive on Insurance Mediation (2002/92/EG) created the first professional licensing requirements for insurance agents in Germany. This study uses data on property-liability insurance policies from a German insurer encompassing the years just before and just after the Directive, to provide evidence of the impact of licensing on insurance intermediation quality. Because many agents left the market once licensing was required, we compare the pre-Directive quality of agents who exit the market with those who remain, and the pre- versus post-Directive quality of agents who remain in the market. Estimation results show no significant effects of licensing on agent quality, either through exit of low-quality agents or through changes in post-Directive quality. Results are most consistent with an increase in consumer search activity after the enactment of licensing.

Suggested Citation

  • Lex, Christoph & Tennyson, Sharon, 2021. "EU intermediary regulation and its impact on insurance agent quality: Evidence from Germany," International Review of Law and Economics, Elsevier, vol. 68(C).
  • Handle: RePEc:eee:irlaec:v:68:y:2021:i:c:s0144818821000454
    DOI: 10.1016/j.irle.2021.106021
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    More about this item

    Keywords

    Business regulation; Financial intermediaries; Insurance agents; Occupational licensing; EU directives;
    All these keywords.

    JEL classification:

    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • M38 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Government Policy and Regulation

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