Insurance Academy

Winning the Race to the Bottom

By Patrick Wraight | May 22, 2019

“The car’s just not worth anything.”

“The state only requires…”

“I don’t owe on it, so I don’t have to have it.”

I’ve heard these sentences recently when talking to people about their insurance. Yes. I talk about insurance when I’m not getting paid to talk about insurance. Don’t you?

All of these statements were true in the context of the conversation.

The car that they were insuring wasn’t worth much of anything.

There are truly state minimum coverage requirements and as long as you have them, the car can be registered and driven on public roads.

Nope. If you don’t owe money on your car, no one is going to force you to buy insurance for damage to it.

While true, these are the statements of people who simply don’t understand insurance and worse, they don’t understand the implications of these thoughts. These thoughts don’t exist in a vacuum, either. They exist in a larger context where insurance companies, insurance professionals, and insurance consumers are involved in a race to the bottom.

I don’t blame the insurance consuming public for these thoughts, I blame us. In our post-modern haste to make everything super-fast, easier than ever, and cheaper than the competition, we have created a problem and we are the only people who can fix it. We are the pace car in the race to the bottom.

In advertising

I have to confess something to you. I really enjoy some of the insurance company commercials. I laughed at Jake from State Farm. I laugh harder at the Professor from Farmers. I have really enjoyed some Mayhem with Allstate. I get the point of the advertising. It’s not meant to tell anyone about what the policy really says, or what the customer experience will really be. Advertising is meant to tie a name, a brand, a feeling, or an idea with something that you buy.

While I get a good laugh, the problem with the advertising is that it doesn’t actually tell me anything about the product. It’s like a car dealer’s commercial that shouts at you about the deals going on right now and don’t miss them. It’s not any different from the pharmaceutical ads that show us smiling happy people holding hands, not frowning sick people holding hands.

The problem with our advertising isn’t in the fun commercials. It’s in the way other companies try and make what they’re doing stand out from others. In some of their spots, they’re trying to tell the consumer that the other companies are trying to make you pay more or trying to sell you coverage that you don’t need. Another spot that is problematic comes when one company wants to convince us that they have this magic product that makes it so that claims don’t affect the future rate of insurance.

The problem with these kinds of ads is that they oversell what that company is trying to get across. In truth, every insurance company can customize policies in ways that can save money. Every policy will allow the consumer to get rid of those pesky “coverages that they don’t need.” Of course, they neglect to mention that you certainly don’t need those coverages until you do. In truth, every customer is in compliance with their states’ laws when they buy the minimum required auto coverage in the state.

That doesn’t mean that they only bought what they needed. That means that they only bought what they felt like they needed in that moment. Does every customer need every coverage? No, but every customer should be aware of what their risks are. That leads to my next thought.

In advising

We’re in a race to the bottom in advising customers. There are a number of insurance agents and companies that are perfectly willing to get the insurance that the insured asks for. They don’t ask any additional questions. They don’t point out that there might be other options for them. They take the order, collect the money, and move on to the next one. That’s not good.

For those who believe that their primary duty to the insured is to get them the insurance that they ask for, please continue that. I’m not going to try and convince you to change today. Tomorrow might be different, but for today, keep doing what you’re doing. Hopefully, Lemonade, Swyfft, Metromile and the other app first agencies and companies will drive you out of the business soon. Their entire premise is that they can give people the coverage that they want without going to see an agent, without filling out tedious paperwork, and without you.

I know that advising people takes time. Assessing their real risks is time consuming. Looking for coverage that really helps them eats up the clock. I get it that it’s easier and more efficient to take the order, deliver the order, collect the premium and move on. My biggest question is whether its better in the long term to have a huge pile of accounts that will come and go based on price or a more select group of accounts that are high quality and can stay around a long time?

While we’re talking about not doing the minimum, can we talk about advocacy?

In advocating

I’ve heard several different views on this topic. Several people have told me that the agent’s job is to represent the interests of the insurance company, and as such shouldn’t advocate for the insured. I’ve also been told that it’s the agent’s job to sell the product and get out of the way. Here’s the problem. You’re dealing with people and the customers don’t always look at it that way.

The customer looks at the agent as the expert. They think that you’re doing your best to get them the best policy that you can. They may ask for some specific things because someone told them to, or because they have had them in the past, they could be borrowing our words and using them the best way they know how. The customer hopes that you’re getting them the policy that makes the most sense to meet their needs.

It gets a little dicey when there’s been a loss, but to the customer, the agent is the person that they know and might be the one person that they most want to talk to. They figure that you know their policy, or that you can look it up and force it to make sense to them. They really think that you know whether the loss is covered or not. We understand that carriers don’t like agents to get in the middle of a claim. I don’t really know what to tell you except that when something bad has happened, your customer might be looking at you for help. Can you say in that moment that you’re not there to advocate for them?

If we continue to drive this race for the bottom, it will end up with many of us having to look for something else to do. The race to the bottom leads to the app replacing the agent and adjuster. The race to the bottom leads to machine learning replacing the underwriter and customer service agent. The race to the bottom is all about a “product” being sold, not a relationship being established. It’s up to us. Do we continue in this race, or step out of it and keep climbing higher, bringing our companies, our customers, and our careers up with it.

About Patrick Wraight

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

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