Persistency in UK Long-Term Insurance: Customer Satisfaction and Service Quality

نویسندگان

  • Stephen Diacon
  • Chris O’Brien
چکیده

The main trust of this paper is to explore the inter-company variations in persistency experience for a sample of 99 U.K. life insurers, using data collected and published by the U.K. financial services regulator. Our first objective is to ascertain whether the undoubted differences in persistency among U.K. long-term insurers are random in nature (as opposed to having some systematic features). Our analysis indicates that there are systematic differences among insurers in withdrawal rates. These differences suggest very strongly that persistency problems do not arise from random factors, but result instead from an inability of insurers to meet the service quality expectations of a wide range of customers. Our second main objective is to determine the nature of any systematic differences in persistency according to company size, efficiency, and ownership structure. We therefore use multivariate techniques to measure the relationship between withdrawal rates and those aspects of service quality that are correlated with variables such as size, new business growth, the expense ratio, and the mutual/stock distinction. The findings suggest that mutual insurers have a better persistency record than stock insurers, offices with higher expense ratios tend to demonstrate significantly higher withdrawal rates, and persistency seems to be negatively related to insurer size.

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تاریخ انتشار 2002