A Reexamination of the Relationship between Organizational Forms and Distribution Channels in the U.S. Property Liability Insurance Industry

Chang Vincent Y., Wang Jennifer L. and Tzeng Larry Y.
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Chang Vincent Y.: Chaoyang University of Technology
Wang Jennifer L.: National Cheng-Chi University
Tzeng Larry Y.: National Taiwan University

Asia-Pacific Journal of Risk and Insurance, 2010, vol. 4, issue 2, 26

Abstract: How do property liability insurance companies choose their organizational forms and distribution channels? Prior studies have not yet provided a consistent conclusion. In this paper, we propose a reduced form approach to reexamine the relationship between organizational forms and distribution channels in the insurance industry, using cross-sectional data pertaining to U.S. property liability insurance companies in 2004. We adopt a conditional dependence test, which can overcome the sensitivity problem of the structural form setting. The results show that after we control for all explanatory variables, the relationship between organizational forms and distribution channels is conditionally uncorrelated. The result is consistent with Regan and Tzeng (1999), but contradicts the findings of Baranoff and Sager (2003) and Kim et al. (1996).

Keywords: organizational form; distribution channel; conditional dependence test; reduced form; structural form (search for similar items in EconPapers)
Date: 2010
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DOI: 10.2202/2153-3792.1074

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