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Finance Seminar

Author:

• David M. Reeb
  National University of Singapore

• Jiang Cheng
  Shanghai University of Finance and Economics

• Wenlan Qian
  National University of Singapore

Exploiting a novel dataset of the universe of complaints to state regulators, we find significant evidence of differential consumer complaints between stock and mutual insurers. These complaint differences are especially pronounced in consumer concerns over reduced claim settlements, delayed payments, customer care, and misconduct (e.g. redlining and fraud). Consumer complaints exhibit a significant increase after natural disasters primarily in stock financial intermediaries. Further analysis reveals that competition among insurers exacerbates these consumer complaint differences between stock and mutual intermediaries. We also discover evidence consistent with weak regulatory oversight of consumer complaints, possibly due to regulatory emphasis on intermediary solvency. Finally, we show that within state increases in consumer complaints about insurers are followed by substantial increases in personal bankruptcies.