A Search Model of Marketing Systems in Property-Liability Insurance
Open accessAbstract
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.
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The switching costs for insurance services include search costs, habit, learning, inertia, and transaction costs.
“The switching costs for insurance services include–search costs (the costs of time invested in searching for the information about claims settlement), habit (investment oriented behavior), learning (financial strength of the insurance company), inertia, costs of transaction in terms of contractual and continuity (the costs of time and effort desired for price bargain and administrative charges) as”
From Health insurance policy renewal: an exploration of reputation, performance, and affect to understand customer inertia (2022) · cites this paper as Posey and Yavas 1995
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The coexistence of distribution systems under price search: Theory and some evidence from insurance
Posey, L. L., & Tennyson, S. (1998) · Journal of Economic Behavior & Organization · doi:10.1016/s0167-2681(97)00100-5 · Cited by 33 · see citing works
Self-citationKautish, P., Khare, A., & Sharma, R. (2022) · Journal of Marketing Analytics · doi:10.1057/s41270-021-00134-7 · Cited by 25 · see citing works
- Authors
- Posey, L. L., & Yavas, A.
- Affiliations
- Pennsylvania State University (US)
- ORCID
- Posey, Lisa Lipowski
- Venue
- The Journal of Risk and Insurance
- Publisher
- JSTOR
- Published
- 1995-12
- Volume
- 62
- Issue
- 4
- Pages
- 666
- ISSN
- 0022-4367 (ISSN-L)
- OpenAlex
- W2047160277
- Cited by
- 39
- References
- 0
- Citations by year
- 2025: 3 · 2024: 1 · 2023: 1 · 2021: 1 · 2019: 1 · 2016: 2 · 2015: 1 · 2013: 3 · 2012: 2
- FWCI
- 3.54
- Type
- journal article
- Language
- en
- Open access
- green
- papers.ssrn.com
- Locations
- Journal of Risk & Insurance (publishedVersion)
- SSRN Electronic Journal (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Insurance and Financial Risk Management
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Healthcare Policy and Management
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Law, Economics, and Judicial Systems
- Keywords
- property-liability insurance, direct writing, search theory, insurance market competition, insurance market equilibrium
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