Abstract

This study uses claim data from the automobile liability insurance of Taiwan to verify the product quality hypothesis, which argues that the insurance broker or agent system can provide better service quality to customers, and thus can coexist with the efficient direct writer system. We depart from the viewpoint of claim service and consider two claim service indicators: negotiation service of claim amount and efficiency in claim processing. Results show that under the same degree of bodily injuries, the claim amount coordinated by the insurance broker or agent is significantly higher than that by the direct writer channel. This finding suggests that the insurance broker or agent outperforms the direct writer system in earning higher claim amount for customers. The results also reveal that the capability of the insurance broker or agent to earn higher claim amount for customers improves further with the increase in the degree of bodily injury of the victims. We find no evidence of the existence of a significant difference between different distribution channels in the efficiency
of claim processing.  

Keywords

insurance broker or agent systemdirect writer systemclaim amount coordination serviceclaim processing efficiency