Do independent agent insurers provide superior service? The insurance marketing puzzle

Prior research suggests that, within the property-liability insurance industry, independent agency insurers have higher expense ratios than insurers using other distribution systems. Consistent with these findings, the independent agents' share of the property-liability market declined from 69 percent in 1970 to 59 percent in 1990. Defenders of the independent agency system argue that higher expense ratios are attributable to a differential in services offered to consumers. Using private passenger automobile insurance complaint data, this study tests for evidence of a perceived service differential between insurers using the independent agency and other distribution systems.