Agent and Broker Intermediaries in Insurance Markets - an Empirical Analysis of Market Outcomes
Thunen-Series of Applied Economic Theory Working Paper No. 34
32 Pages Posted: 27 Jan 2005
Date Written: 2002
Insurance markets are characterized by profound market imperfections. Insurance intermediaries reduce transaction costs and information asymmetries. From transaction cost economics,agency theory, and law and economics literature the hypothesis is derived that insurance brokers may provide more high-quality information and advisory services which are better suited for the needs of the consumers than insurance agents. Empirical tests for German insurance intermediaries confirm this thesis. But there are also findings that structural factors like firm size, employment structure and degree of specialization may outweigh the incentives set by different legal settings.
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Keywords: Insurance, intermediation, transaction costs economics, principal agent theory, law and economics
JEL Classification: D82, G140, G220, L15
Suggested Citation: Suggested Citation