TITLE
"Complaint Ratios and Property-Casualty Insurer Characteristics,"
Journal of Insurance Issues,
James M. Carson, Kathleen McCullough and David T. Russell, Fall
2005, Vol. 28, No. 2, pp. 151-166. Full-text articles soon will
be available through ABI/INFORM and EBSCO. Entire
article in Acrobat format.
ABSTRACT
We extend previous research by Doerpinghaus (1991) and others
by examining relationships between private passenger auto insurance
complaint ratios and insurer characteristics. Consistent with
Doerpinghaus, results indicate that insurers with higher complaint
ratios are more likely to write high-risk auto coverage. In
addition, this study provides evidence that insurers experiencing
relatively fewer
complaints spend significantly less on legal and auditing expenses
and have a larger
share of the state auto insurance market under consideration.
While the direct writer
distribution system is associated with significantly lower complaint
ratios in a threefactor
model, the significance ceases when the model is expanded to include
additional
insurer characteristics. Results also vary somewhat across the
two states examined
(Illinois and Oregon), but findings for several variables are
consistent across these
states. Robustness tests highlight the importance of the complaint
ratio definition and
the need for consistent complaint reporting at the state level.
[Key words: complaint ratio, service quality, auto insurance,
distribution system]
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