Insurance Academy

A Response to Some Insurtech Claims, Part 3

By Patrick Wraight | Academy Journal Blog | August 30, 2017

So far, we’ve dealt with two statements:

We do good!

It’ll just take a few seconds!

This last statement is part of the premise of many in the insurtech space, but it’s also something that we’ve been dealing with for far too long in insurance. Let’s get into this conversation about money.

Statement #3: You’ll save so much money!

No one insurer site is to blame for this. There are several insurers that market strictly on price. All you have to do is watch for the ads in the apps you use and the games you play on your phone. (Yes, we all know that you’re playing some simple mindless game on your phone. It’s ok, just watch when you’re doing it, right?)

Implication: Insurance is a product that you shop for based on price. There are no differences in company or coverage. It’s all about the bottom line dollars. How much will it cost you? You have other things that you want to be doing anyway.

Response: Stop it. Just stop it. If you’re selling insurance based on the price, do us all a favor and stop. You’re not helping anyone, even yourself. We should be helping people to buy insurance, not selling them insurance. What’s the difference? Good question. Selling insurance is saying, “I can save you 15%.” Helping to buy is about educating about the things that people need to know about their insurance. It sounds more like, “Yes, we can find ways to save you money today, buy let’s first find out how best to protect you and your family and then we can talk about ways to save money.”

Insurance is not just another product. I can go to the grocery store and pick among products and often price is the decider. I’ll pick the one that’s about a quarter less than another item. When I do that about 20 times, I realize some savings and feel better about my shopping experience. When I’m shopping for insurance (and yes, I shop for my insurance, too), I’m looking for so much more than the price. I can do the “compare tool” and get a bunch of quotes for my auto, but what do they mean? What does one cover that another doesn’t?

When I last shopped my HO-4, I found a great price, but what sold me was the difference in the policy. The policy I bought included flood as a covered peril, did not have a hurricane deductible (amazing since I live in Florida), and allowed me to work from home without any issue.

To be fair, I didn’t use an agent mostly because I am such a bad customer to deal with for an agent. I start asking questions and take a lot of their time so I didn’t want to put them through that.

Every time someone sells an insurance product based on the price, they are devaluing the insurance product. We should be helping people to buy. This requires getting to know the customer, finding out what their real risks are, finding some insurance products that meet those needs, and then (and only then) talking about the prices.

Insurance companies all over the world are quietly doing good things. Yet, some of our startup friends want us to believe that they’re the only ones that do good. Some companies say that it’ll only take a few moments to get a policy from them. That’s not the whole story. Eventually they will ask some more questions. Save some money. Buy your lunch based on who makes the best $5 lunch. Don’t let people buy insurance based on how much it’ll cost them today.

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