The Ownership Complaint Gap: Mutual vs. Stock Intermediaries

Abstract

We document a substantial customer complaint gap between stock and mutual financial firms. To assess whether this 21% per year complaint gap stems from complaint-prone customers in stock insurers, we examine state-adjudicated complaint success. To further delineate between customer selection or treatment explanations, we exploit within insurer complaints around random claims (natural disasters) and attention shocks (media scrutiny). Further tests reveal the complaint gap widens with greater competition, near insolvency thresholds, and with more price regulation. Overall, the results are inconsistent with the hypothesis that mutual financial firms exhibit low customer satisfaction, suggesting customers find this a beneficial organizational structure.

Keywords: Organizational Structure; Insurance; Regulation; Consumer Complaints; Financial Intermediary; Ownership; Consumer Financial Protection; Property-Casualty; Claim Delay; Claim Denial

JEL Classification: G32; G22; L22; D18; K23