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Winning the Race to the Bottom



"The car's just not worth anything."

"The state only requires …"

"I don't owe 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.

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

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

The car can be registered and driven on public roads.

Nope. If you don´t have 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 just don't understand insurance and worse, they don 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 the bottom.

I blame the insurance consuming public for these thoughts, I blame us. In our post-modern rush 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 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 at the Professor from Farmers. I really enjoyed some Mayhem with Allstate. I get the point of the advertising. It's not meant to tell anyone what the policy really says, or what the customer experience will really be. Advertising is meant to be 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 actually doesn't tell me anything about the product. It's like a car dealership that sells 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 looking sick people holding hands.

The problem with our advertising is not in the fun commercials. It's in the way other companies try and make what they're doing out of 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 that you don't need. Another spot that is problematic comes when one company wants to know that they have this product that makes it so that claims don't affect the future rate of insurance.

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 coverages that they don't need. Of course, they neglect to mention that you do not need those coverages until you do. In truth, every customer is compliant with their states' laws when they buy the minimum required auto coverage in the state.

That doesn't mean they only bought what they needed. That means 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 are in a race to the bottom in advising customers. There are 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 may 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 they want without going to an agent, without filling out paperwork, and without you. [IknowthatadvisingpeopletakestimeAssessingtheirrealrisksistimeconsumingLookingforcoveragethatreallyhelpsthemeatstheclockIgetitthatit'seasierandmoreefficienttotaketheorderdelivertheordercollectthepremiumandmoveonMybiggestquestioniswhetherit'sbetterinthelongtermtohaveahugepileofaccountsthatwillcomeandgobasedonpriceoramoreselectgroupofaccountsthatarehighqualityandcanstayaroundalongtime?

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

A lawyer

I've heard several different views on this topic. Several people have told me that the agent's job is to represent the insurance company, and as such should not be a lawyer 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 are dealing with people and the customers 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 the best policy that you can. They may ask for some specific things because someone told them, or 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 the policy that makes the most sense to their needs.

It gets a little dice when there's a loss, but to the customer, the agent is the person that they know and might be the one person they want to talk to. They are the ones who know their policy, or that you can look 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 to get in the middle of a claim. I really know what to do except when something bad has happened, your customer might be looking at you for help.

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.


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