Final answer:
Customers are indeed less likely to switch to a competing firm when they have multiple policies with one insurer, as this provides them with convenience and perceived value. This loyalty is further reinforced by the collective bargaining power of insurance companies and government requirements for specific insurances.
Step-by-step explanation:
It is true that agencies, brokerages, and insurers find that customers are less inclined to defect to the competition when they have more than one policy with an organization. This phenomenon is due in part to the increased convenience and the perceived value that customers receive from holding multiple policies. Additionally, insurance companies benefit from the ability to negotiate lower rates with service providers due to the volume of clients, which provides a competitive edge and incentivizes customers to remain with a single insurer. Moreover, government interventions also play a role, such as legal requirements for certain insurances, contributing to a more stable customer base and market average pricing, which encourages customer loyalty.