Marketing Channel, Corporate Reputation and Profitability of Life Insurers

Abstract

This paper investigates the impact of marketing channel on corporate reputation and profitability of life insurers based on the evidence of bancassurance. With consideration of endogeneity among the variables, the result indicates that marketing through bancassuance reduces underwriting service quality and thus negatively affects insurer’s reputation. On the other hand, bancasurrance shows an advantage in cutting underwriting expenses and consequently contributes to profitability. The result is opposite to that of traditional channel of salespersons. This paper also finds that a positive and sustained relation between corporate reputation and profitability. The result implies that life insurers must be cautious of marketing through bancassurance because its negative impact on underwriting service quality may counteract its advantage of cost-saving due to reputation deteriorating in the long term.