Insurance Academy

Overcoming Human Inertia

By Patrick Wraight | March 27, 2019

I don’t know if you’ve noticed this or not yet, but things are changing around us, and we don’t like change. I find one of the most powerful forces in our lives is the force of human inertia.

You might remember from high school that inertia is that physical property that tells us that an object at rest tends to stay at rest and an object in motion tends to stay in motion unless acted upon by an outside force. The word comes from the word “inert” which means not having the strength to move or being chemically inactive. For those who took chemistry, remember your inert gases (neon, argon, etc).

When I think about human inertia; I think about our tendency to either stay where we are or to keep going where we’ve been going. We like to go the direction that we have always been going. It may not lead anywhere, but it’s familiar and it doesn’t require any change, so we like it. We like to do what we’ve done. It may not be what we need to do, but it has always worked, even though it may not have always worked. We like to stay where we are. We do not like to change those things. You want examples?

If you’re a baseball fan, you may have noticed that free agency this winter didn’t work like it used to. For years, a player could play great baseball during their first professional contract and get paid well for it. The industry had made it a pattern that the second contract is where the big money came from. If a player was better than average, he could count on a contract that would pay him for what he had already done, not necessarily what he would do.

This year, baseball teams were more interested in paying players based on what their statistical analyses showed would be their probable future production. It was no longer a promise that if you did well in your first contract, the second would be great. I could go on into the statistical revolution that has come in baseball, but I think you get it.

It’s no different in insurance. We are seeing monumental change and it’s no longer out there on the horizon. It’s right in front of us. We’re walking in the middle of it. On the other hand, if you think the biggest changes are here, you’re mistaken. They are still so far out that we can’t see them all, but they’re coming so quickly that you have to be watching or they’ll be here before you see them. The insuretech space is still figuring out the insurance market. They are still working on what insurance will look like moving into the 2020’s and beyond.

Many of us want it to look like it did when we started. We want insurance to be the same as it was in the 70’s, 80’s, or 90’s. If you got some of us alone with a lie detector, you’ll find out that we wish there were still filing cabinets full of client files; Rolodexes full of our contacts; and all meetings are face-to-face. We want it to go back to a time when the world came to us for their insurance needs because our friends at the banks or in the governments made them come in. That’s when we would try and upsell them into higher limits and additional policies.

Problem: it will never go back to that.

Back in the day, there were only landline phones and computer terminals. Oh, there have been mobile telephones for a long time. AT&T came up with a Mobile Telephone Service with telephones installed in some cars in the 1940’s. But those phones in cars were nothing like the phones that we all carry in our pockets. The insurance landscape is changing along with our electronic lives. Your customers are not looking for your office number in the Yellow Pages (does anyone still use the Yellow Pages anymore?) In fact, if your website looks the way I think it does, they aren’t looking at that, either.

Your customers are using their mobile phones and when they start looking for insurance, the trackers in the background will start to show them every app-based insurance agency that could possibly serve them. They’ll start looking at those apps. They’ll find one that has the best reviews and download it. Ten minutes later, they have a new renter’s policy that probably smells a little lemony…

How did we get here?

I’m going to take you back in time a little. When I was a kid, insurance companies sponsored TV shows, like Mutual of Omaha’s Wild Kingdom. The only other advertising that I remember from insurance companies was when the local State Farm agent bought the big inside back cover ad on the Yellow Pages. Over the last 40 years, insurance companies have hired advertising experts and they discovered that people didn’t necessarily need to hear about the truth about their insurance in order to buy, they only needed something memorable from your advertising so that when they went to buy, something would click. So, we got cavemen, we got a gecko, we got a professor, we got mayhem, and we got a lady in a white outfit and apron, with a blue name across the front.

Then while we weren’t looking, the insuretech space took up that tactic and decided that your customers needed something that was easy to use, didn’t require a visit to an office, and if it wasn’t expensive, that worked, too. The rest that they needed was to make sure that your customers felt like they were doing a better job at trying to make the world a better place, and convincing them that you and your company were all about taking money and not giving back, even though you’re probably their kids’ coach, too.

So, we got lemonade. Lemonade promised to be everything that they said that insurance wasn’t. It was supposed to be about building a better world together. It was supposed to be about making everything fast and easy. They blogged about how much money they gave away and how super easy buying insurance and filing claims was with them. They announced that they were on the right side of issues like gun control, even though they made no substantive changes to their policies.

Then they came out with what they called Policy 2.0. That’s when they gave the community a chance to try and write an insurance policy. Turns out that no one really wants to write their policy. They just want it to cover their “stuff” (Lemonade’s word for personal property, sometimes). Then we found out the Berkshire Hathaway, one of those companies that we respect, was working on Three. Let’s be honest. We felt betrayed by that. I mean, they are one of us. They’re part of the Old Guard and they want to write a three page policy?

Here’s the part you’re really not going to like.

Lemonade and Three and their like are just the beginning. What we are seeing today is a lot like a stable beta test. That’s what the IT team tells us is a site that generally works, but might still break down. Companies are experimenting to see what works. Whether Policy 2.0 ever comes to market or not or whether Three becomes a viable product or not is not the point. They simply represent the current experimental step.

There will be more steps. As each company watches the others, they will experiment, tweak, adjust and try more things. Eventually, what we know about insurance will be flipped on its ear and unless we come along, we’ll be left with our office space, no customers coming in the doors, and a Rolodex full of names and numbers of customers, contacts, and networks that we used to have.

Solution: get over it and come along.

It took a minute to get here, but what we need to learn is that things are NEVER going back to where they were. We cannot sit in our offices and cry about how it used to be. We must come along. No. We don’t need to accept the things that are just crazy. Do I really think that Policy 2.0 or Three will take over the market? No. I think that as products, they’ll fail. I also believe that others will learn from them and create something that might not fail.

We do need to accept that the change is happening all around us. We do need to get in on some of the change. We do need to have a digital experience for our customers. We do need a way for people to reach us on their time, not ours. That means that they need to be able to text you the details of a claim so that you can get to check writing. That means that they need to be able to submit changes by a text, or mobile experience that walks them through the process (easily).

As with everything, you can ignore this if you want to, but when your office closes because you waited six months too long to jump in and when you did, you did it part way, I might rent it. Maybe I could open my own Insurance Cafe. You know, like that bank is advertising?

About Patrick Wraight

Patrick Wraight, CIC, CRM, AU, is director of Insurance Journal's Academy of Insurance. He can be reached at pwraight@ijacademy.com.

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