Would love to see Bill Wilson’s comments on this but the link listed as “Want More? Check out Bill Wilson’s analysis of Berkshire’s THREE policy” just brings me to the FAQ landing page for the actual THREE product. lol
Buffett should stick with investing and stay away from trying to reinvent insurance policy language. Buffett is a smart guy, but on this subject, he gets a grade of F- in my mind. Insurance policy language is a partial result of countless court cases and other factors and attempts to make things more simple by having fewer words is a recipe for disaster. However, Berkshire has tons of money to spend and lose in their quest to promote and sell this product. Good luck!!
It seems like this is meant to be a direct product. Until I hear otherwise I assume a company as knowledgeable in the insurance game as BH understands that by enticing this class of insureds (small small business) away from a BOP by advertising it is better/simpler that when claims do come up they don’t have much room to deny payments. Idea is the insurer probably would be on the hook even with a BOP so this product won’t be denying much coverage, but just the opposite. It will pay out more than it actually should but BH is betting it can still win with overhead reductions and commission savings and only insuring a certain class which historically has a very low risk for catastrophic loss.
Not available in Florida so I’m a happy agent. If they can get a BOP policy going online and quickly issued, we agents will lose a lot of those types of clients. While BOP customers don’t pay a lot, we get their PL coverage (lawyers, medical pros, accountants, consultants, financial advisors, etc.) which can pay very well.
Reminds me of other insurance company managers who come up with one initiative after another, because they think that is their place to do so. BH should stick with their very successful ”buy good businesses plan.’ Easy to sell against this policy with the tried and tru BOP, ‘do you really want to call a claim on this new fangled policy at 4pm on a Friday afternoon and be told you’re prob not covered?’
Kind of like “15 minutes can save you 15%.” Well, maybe. BH will advertise the crap out of this and will be successful insuring those who don’t really take the time to understand much about insurance. Ignorance can be bliss.
We attempted to do this in an affinity market some years back. We scrubbed some sample independent agent books to get an idea of what was available/already on the policies. While it was 5 or so years ago the answer was nothing. The process was laborious and the commissions not worth the effort. So the vast majority of owners were without cyber, pollution, EPLI. This coverage all approach will appeal to small business owners with all their hair and the ability to access their computers. It will be interesting to see how it plays out but it’s the future.
As long as it’s underwritten properly, using meta data or Artificial Intelligence and other smart stuff like that, and aimed at the proper market, I think Mr. Buffett is going to succeed. I am not sure I’d offer this product in all fifty states, though. Revolutionaries, and I prefer that term to disrupter, are often dismissed at the beginning.
They All Laughed at Christopher Columbus.—– Frank Sinatra
This is a direct product for sure and I agree BH has the resources to get things right. My concern is that small businesses are not in a position to challenge a carrier like BH; lack of “industry standard” wording developed by ISO and/or NCCI makes the product litigation friendly. But can very small businesses take on the expense if they are not satisfied with the claims handling?
Would love to see Bill Wilson’s comments on this but the link listed as “Want More? Check out Bill Wilson’s analysis of Berkshire’s THREE policy” just brings me to the FAQ landing page for the actual THREE product. lol
Sorry, I just saw this. My original article:
https://insurancecommentary.com/from-2-0-to-3/
Buffett should stick with investing and stay away from trying to reinvent insurance policy language. Buffett is a smart guy, but on this subject, he gets a grade of F- in my mind. Insurance policy language is a partial result of countless court cases and other factors and attempts to make things more simple by having fewer words is a recipe for disaster. However, Berkshire has tons of money to spend and lose in their quest to promote and sell this product. Good luck!!
It seems like this is meant to be a direct product. Until I hear otherwise I assume a company as knowledgeable in the insurance game as BH understands that by enticing this class of insureds (small small business) away from a BOP by advertising it is better/simpler that when claims do come up they don’t have much room to deny payments. Idea is the insurer probably would be on the hook even with a BOP so this product won’t be denying much coverage, but just the opposite. It will pay out more than it actually should but BH is betting it can still win with overhead reductions and commission savings and only insuring a certain class which historically has a very low risk for catastrophic loss.
they pay commissions.
Not available in Florida so I’m a happy agent. If they can get a BOP policy going online and quickly issued, we agents will lose a lot of those types of clients. While BOP customers don’t pay a lot, we get their PL coverage (lawyers, medical pros, accountants, consultants, financial advisors, etc.) which can pay very well.
I doubt it’s Mr. Buffet’s idea.
He lets his top management make those decisions.
Reminds me of other insurance company managers who come up with one initiative after another, because they think that is their place to do so. BH should stick with their very successful ”buy good businesses plan.’ Easy to sell against this policy with the tried and tru BOP, ‘do you really want to call a claim on this new fangled policy at 4pm on a Friday afternoon and be told you’re prob not covered?’
Kind of like “15 minutes can save you 15%.” Well, maybe. BH will advertise the crap out of this and will be successful insuring those who don’t really take the time to understand much about insurance. Ignorance can be bliss.
Pie Insurance is advertising they can quote a business WC in two minutes. Hmm.
We attempted to do this in an affinity market some years back. We scrubbed some sample independent agent books to get an idea of what was available/already on the policies. While it was 5 or so years ago the answer was nothing. The process was laborious and the commissions not worth the effort. So the vast majority of owners were without cyber, pollution, EPLI. This coverage all approach will appeal to small business owners with all their hair and the ability to access their computers. It will be interesting to see how it plays out but it’s the future.
As long as it’s underwritten properly, using meta data or Artificial Intelligence and other smart stuff like that, and aimed at the proper market, I think Mr. Buffett is going to succeed. I am not sure I’d offer this product in all fifty states, though. Revolutionaries, and I prefer that term to disrupter, are often dismissed at the beginning.
They All Laughed at Christopher Columbus.—– Frank Sinatra
Given the lack of catastrophic loss exclusions, I’d stay away from coastal areas, EQ zones, and violent weather exposures.
This is a direct product for sure and I agree BH has the resources to get things right. My concern is that small businesses are not in a position to challenge a carrier like BH; lack of “industry standard” wording developed by ISO and/or NCCI makes the product litigation friendly. But can very small businesses take on the expense if they are not satisfied with the claims handling?
The trial bar is going to love this policy.