Consumer Information and Decisions to Switch Insurers

This article examines the interaction of various factors in an individual's decision to switch insurers. In particular, expectations about insurer quality attributes as well as search costs and switching costs are modeled as affecting the consumer's switching decision. Data from a 1983 survey of 2,004 German individuals are used to determine consumers' impressions about the quality and price of their auto insurance policies. The empirical analysis shows how consumer informedness plays a key role in the switching decision. Factors affecting consumer informedness and the sources of consumer information also are examined.