A Search Model of Marketing Systems in Property-Liability Insurance

JOURNAL OF RISK AND INSURANCE, Vol. 62 No. 4, December 1995

Posted: 22 Aug 1998

See all articles by Lisa Lipowski Posey

Lisa Lipowski Posey

Pennsylvania State University - Department of Insurance & Real Estate

Abdullah Yavas

University of Wisconsin - School of Business - Department of Real Estate and Urban Land Economics

Abstract

Earlier studies (e.g., Joskow, 1973; Cummins and VanDerhei, 1979; and Barrese and Nelson, 1992) have shown that insurers using independent agencies have higher costs than those employing the direct writing system. These studies indicate that competition in insurance markets should have eliminated the independent agency system. This article develops a search theoretical model for an insurance market where insurers and potential policyholders search for each other to form a match. We prove that there exist equilibria where the independent agency and direct writer marketing systems coexist.

JEL Classification: G22

Suggested Citation

Posey, Lisa Lipowski and Yavas, Abdullah, A Search Model of Marketing Systems in Property-Liability Insurance. JOURNAL OF RISK AND INSURANCE, Vol. 62 No. 4, December 1995. Available at SSRN: https://ssrn.com/abstract=6904

Lisa Lipowski Posey (Contact Author)

Pennsylvania State University - Department of Insurance & Real Estate ( email )

University Park, PA 16802-3306
United States
814-865-4172 (Phone)
814-865-6284 (Fax)

Abdullah Yavas

University of Wisconsin - School of Business - Department of Real Estate and Urban Land Economics ( email )

School of Business
975 University Avenue
Madison, WI 53706
United States

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