Does Signaling Work in Markets for Information Services? An Empirical Investigation for Insurance Intermediaries in Germany

Insurance intermediation services are information services which exhibit strong information asymmetries. We empirically analyze whether signaling works in the German market for insurance intermediation services. For this a signal must increase service quality and be easily identifiable by consumers so that it pays for intermediaries to spend the related costs. By using OLS and logit estimations we test whether intermediary type, reputational activities and a variety of signaling instruments work as credible signals. Our findings confirm the main hypotheses derived from signaling theory as to the poor working of market forces in markets for information services. Accordingly, public policy regulation is necessary to mitigate the resulting problems.signaling, insurance intermediation, information services

The Quality of Insurance Intermediary Services - An Analysis of Conduct and Performance in the German Market of Insurance Intermediation

Based on a sample of 946 German insurance intermediaries, the factors that affect the quality of the information services provided by them are studied using OLS-estimations. Applying a search theoretical approach, we analyze the impact of supply and demand side variables on service quality. Besides, the working of signaling devices (like reputation, advertising or certificates) to reduce asymmetric information with respect to the service quality of insurance intermediaries is examined. The results obtained support the main hypotheses derived from industrial organization theories as to the poor working of quality competition under incomplete and asymmetric information on the side of consumers. Thus, public policy should concentrate on increasing transparency about intermediaries' (in-)dependence from insurance companies and improve consumers' financial literacy to raise the overall quality of the information services provided by insurance intermediaries.Performance of Insurance Distribution Systems, Information Quality

The Open Method of Co-ordination on Pensions - An Economic Analysis of its Effects on Pension Reforms

This paper analyses the potential effects of the open method of co-ordination on pension reforms in the European Union from an economic point of view. The main results are: (1) For the first time, the Commission formally participates in the input of pension policy-formation of the member states, but without affecting their ultimate decision-making powers. (2) However, the OMC might foster yardstick competition and thus mutual learning from the reform experiences of other member states. (3) In contrast to that, no clear effects on the rent-seeking behaviour of special-interest groups and thus on their influence in shaping pension reforms can be derived.Pension Reform, EU Integration, Regulatory Competition

The Quality of Insurance Intermediary Services – Empirical Evidence for Germany

Insurance intermediaries help consumers to economize on information and transaction costs in insurance markets. However, competing insurance intermediaries provide heterogeneous services, which are difficult to assess by incompletely informed consumers. Transaction costs economics, search theory and principal agent theory provide arguments on product quality differences between the two main distribution channels in insurance markets (exclusive agents vs. independent intermediaries). The present paper uses a sample of 927 insurance intermediaries in Germany. By performing OLS estimations we test the impact of the different distribution channels, but also of other factors relating to the information processing activities on intermediaries’ service quality. Depending on the proxies used for service quality, we find mixed evidence for the “product quality” hypothesis according to which independent intermediaries provide better service quality than exclusive agents. We find that service quality depends also to a large extent on the information gathering and processing activities of the individual intermediaries.Insurance Distribution Channels, Service Quality

Soziale Dienste und Europäisches Gemeinschaftsrecht - Die freie Wohlfahrtspflege zwischen nationalstaatlicher Souveränität in der Sozialpolitik und europäischem Wettbewerb im Dienstleistungsbereich

Obwohl die Kompetenz zur Ausgestaltung ihrer sozialen Sicherungssysteme nach wie vor bei den Mitgliedstaaten der europäischen Union liegt, wendet der Europäische Gerichtshof seiner bisherigen Tradition folgend das europäische Gemeinschaftsrecht zunehmend auch auf die wirtschaftliche Seite sozialer Leistungen an. Dieser Beitrag untersucht die ökonomischen Konsequenzen, die sich daraus für die freie Wohlfahrtspflege und den Markt für soziale Dienste in Deutschland ergeben könnten. Das Resultat wäre eine Unterstützung der in den vergangenen Jahren eingeleiteten Reformmaßnahmen dieses Sektors, wobei eine darüber hinausgehende umfassende Deregulierung nicht zu erwarten ist. In der Folge stellt sich jedoch die Frage nach der adäquaten Kompetenzverteilung zwischen nationaler und europäischer Ebene erneut, um eine stillschweigende Verlagerung von Zuständigkeiten zu verhindern.Sozialpolitik, Wettbewerbspolitik

The Quality of Insurance Intermediary Services – Empirical Evidence for Germany

Insurance intermediaries help consumers to economize on information and transaction costs in insurance markets. However, competing insurance intermediaries provide heterogeneous services, which are difficult to assess by incompletely informed consumers. Transaction costs economics, search theory and principal agent theory provide arguments on product quality differences between the two main distribution channels in insurance markets (exclusive agents vs. independent intermediaries). The present paper uses a sample of 927 insurance intermediaries in Germany. By performing OLS estimations we test the impact of the different distribution channels, but also of other factors relating to the information processing activities on intermediaries’ service quality. Depending on the proxies used for service quality, we find mixed evidence for the “product quality” hypothesis according to which independent intermediaries provide better service quality than exclusive agents. We find that service quality depends also to a large extent on the information gathering and processing activities of the individual intermediaries

Wirtschafts- und finanzpolitische Koordinierung in der EU – Erfahrungen aus einem Jahrzehnt Politikkoordinierung

The year 2010 showed how prone to crisis the Euro zone is. To a great extent this results from insufficient public policy coordination of EU member states’ public and fiscal policies. This paper discusses the main reform proposals related to fiscal, public and structural policy against the background of the underlying collective coordination problem. In addition it also considers the suggestions made for introducing a crisis mechanism. Although the main actors in the Euro zone seem to be aware of the problems of the existing coordination mechanisms, it is still doubtful whether the measures finally taken will be effective enough

Wirtschafts- und finanzpolitische Koordinierung in der EU – Erfahrungen aus einem Jahrzehnt Politikkoordinierung

The year 2010 showed how prone to crisis the Euro zone is. To a great extent this results from insufficient public policy coordination of EU member states’ public and fiscal policies. This paper discusses the main reform proposals related to fiscal, public and structural policy against the background of the underlying collective coordination problem. In addition it also considers the suggestions made for introducing a crisis mechanism. Although the main actors in the Euro zone seem to be aware of the problems of the existing coordination mechanisms, it is still doubtful whether the measures finally taken will be effective enough

The Quality of Insurance Intermediary Services – Empirical Evidence for Germany

Insurance intermediaries help consumers to economize on information and transaction costs in insurance markets. However, competing insurance intermediaries provide heterogeneous services, which are difficult to assess by incompletely informed consumers. Transaction costs economics, search theory and principal agent theory provide arguments on product quality differences between the two main distribution channels in insurance markets (exclusive agents vs. independent intermediaries). The present paper uses a sample of 927 insurance intermediaries in Germany. By performing OLS estimations we test the impact of the different distribution channels, but also of other factors relating to the information processing activities on intermediaries’ service quality. Depending on the proxies used for service quality, we find mixed evidence for the “product quality” hypothesis according to which independent intermediaries provide better service quality than exclusive agents. We find that service quality depends also to a large extent on the information gathering and processing activities of the individual intermediaries

Public policy coordination in the EU - experiences from one decade of policy coordination

The year 2010 showed how prone to crisis the Euro zone is. To a great extent this results from insufficient public policy coordination of EU member states’ public and fiscal policies. This paper discusses the main reform proposals related to fiscal, public and structural policy against the background of the underlying collective coordination problem. In addition it also considers the suggestions made for introducing a crisis mechanism. Although the main actors in the Euro zone seem to be aware of the problems of the existing coordination mechanisms, it is still doubtful whether the measures finally taken will be effective enough.EU policy coordination; fiscal policy