Comparing Single- and Multi-Channel Distribution Strategies in the German Life Insurance Market : An Analysis of Cost and Profit Efficiency

To explain the success of different distribution strategies in the life insurance industry, we analyze the performance of single- and multi-channel distribution firms in the German life insurance industry. We estimate cost and profit efficiency for three groups of life insurers: multi-channel insurers, direct insurers, and independent agent insurers. We use non-parametric Data Envelopment Analysis to calculate efficiencies for German life insurers for the years 1997-2005. We identify the absence of performance advantages of specialized insurers as the most important reason for the coexistence of different distribution systems