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

This research uses original data from matched pairs of insurers and their independent agents to examine whether it is possible to build committed relationships between insurers and independent agents, how such commitment could be built, and whether 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 addition, it is shown that commitment enhances performance outcomes for both insurers and their agents.