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Credible or Biased? An Analysis of Insurance Product Ratings in Germany

Author

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  • Born Patricia A.

    (Florida State University)

  • Müller Stephanie

    (Ludwig Maximilian University)

  • Tennyson Sharon

    (Dept of Policy Analysis and Management, Cornell University)

Abstract

Instruments such as product ratings can help to overcome information asymmetries in retail financial markets. However, the capacity of ratings to promote market transparency and consumer awareness depends critically on whether they are credible. This article provides an empirical investigation of insurance product ratings in Germany, with an emphasis on the potential sources of bias that could undermine rating credibility. The analysis employs a panel dataset containing ratings for disability insurance products from two rating agencies over a 15-year period. Using the existing literature as a guide, we test a series of hypotheses regarding factors that may explain the variation in rating outcomes over time and across rating agencies. Our results suggest no major concerns regarding the credibility of insurance product ratings.

Suggested Citation

  • Born Patricia A. & Müller Stephanie & Tennyson Sharon, 2020. "Credible or Biased? An Analysis of Insurance Product Ratings in Germany," International Review of Financial Consumers, Sciendo, vol. 5(1), pages 25-39.
    • Handle: RePEc:vrs:irfinc:v:5:y:2020:i:1:p:25-39:n:1003
    DOI: 10.36544/irfc.2020.5-1.3
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