Resource title

Commitment and its consequences in the American agency system of selling insurance

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The American Agency system of selling insurance is an institutional arrangement in which independent agents represent multiple insurers and hold property rights by virtue of owning the rights to the expirations of the policies they sell. This system of selling has been heavily criticised for lack of performance and is losing market share in North America. We use original data from matched pairs of insurers and their independent agents to examine whether it is possible to built committed relationships between insurers and agents, how such commitment could be built, and wether any benefits are realized in such relationships. It is shown that mutual commitment can be built by a process of signaling and reciprocity between insurer and agent, but that one-sided commitment is difficult to create. It is shown that commitment enhances performance outcomes for both insurers and their agents, whether or not either party is aware of its counterpart's true level of commitment to their relationship

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en

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application/pdf

Resource resource URL

http://flora.insead.edu/fichiersti_wp/inseadwp1996/96-42.pdf

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Copyright INSEAD. All rights reserved