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Does the product quality hypothesis hold true? Service quality differences between independent and exclusive insurance agents

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  • Trigo Gamarra, Lucinda

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.

Suggested Citation

  • Trigo Gamarra, Lucinda, 2007. "Does the product quality hypothesis hold true? Service quality differences between independent and exclusive insurance agents," Thuenen-Series of Applied Economic Theory 76, University of Rostock, Institute of Economics.
  • Handle: RePEc:zbw:roswps:76
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    References listed on IDEAS

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    1. Paul J. M. Klumpes, 2004. "Performance Benchmarking in Financial Services: Evidence from the UK Life Insurance Industry," The Journal of Business, University of Chicago Press, vol. 77(2), pages 257-274, April.
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    More about this item

    Keywords

    Insurance intermediation; service quality; distribution systems;

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • 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

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