Distribution and competition in the motor insurance industry: the Italian case, by Luigi Buzzacchi
This paper details the use of different insurance distribution systems, analyses key issues in distribution models based on economic theories of market competition and the organization of the firm, and discusses public policy and regulatory issues related to insurance distribution. On the theoretical side, it focuses on the choice of distribution systems by an insurer, the nature of insurer-agent relationships, including compensation structure and resale price maintenance. On the institutional side, it proposes a critical discussion of the opinions illustrated in the fact-finding inquiry on the auto liability insurance industry by the Italian Antitrust Authority (2003), where the prevalent diffusion of exclusive agents is regarded as a key determinant of the poor allocative efficiency of the market. While the Authority aimes for the diffusion of independent agents, I argue that an important improvement could be gained by limiting the use of resale price maintenance, even with exclusive distribution.