Reality is this; insurance companies are run by other members of our human species. They are also influenced by their surroundings both human and inanimate. They are influenced by many of the same ideals, both positive and negative as the rest of us. There is a lot of talk about “disruption,” #insurtech, #fintech, and #bigdata. The industry is “ripe” for change, blah, blah, blah.
Yes I have many of my own thoughts, heck it’s my blog so of course they are my thoughts. This dawned on me the other day;
Maybe the insurance industry is just a reflection of society. But how? In what way(s)?
So it came to me right in the midst of the holiday season. Many of us buy new gifts for loved ones. Many households, especially those of us with children, are likely experiencing an overload of toys. Some of us now have items we don’t need, didn’t ask for and likely don’t want. BUT, I am hopeful we appreciate the effort.
I’m hopeful that many of us still appreciate what we have and don’t simply throw away what we have to replace it with the new and shiny.
Than again, we will still have building after building of storage units for all the “stuff” we cannot bring ourselves to throw away or sell. *Not sure where this fits in, are we all, on some level ,hoarders? Are we so appreciative of “things” that we cannot throw them away?
But how does this fit the industry?
The average retention rate of a company and even brokerages/agencies is not talked about often enough. When it is talked about, it seems like a “white flag” has already been waived and that they simply accept the fact that they will let customers go
**This is important, whether you are a company, agent or broker you let people leave more than they actually leave you****
No idea really, the math and every basic human as well as business idea/philosophy tends to go against this. But this is where I am beginning to think that the cause is much deeper than business and math. Maybe it is deeply rooted in the subconscious. Maybe it is tied deeply with your personal characteristics and how you are influenced by society.
Let’s face it, most of us ignore the ideas of repurpose, recycling, repairing etc. Many of these people also simply buy new since it is convenient. Maybe it is a lack of appreciation for what they have already(think profitable, blindly loyal customers). But when it comes to insurance this attitude is very, very expensive. Think SIX BILLION + in advertising expenses instead of less than a billion(my guesstimate) in retention expenses.
How do you/we break the cycle? At what point will a company “stop the madness” so to speak and start appreciating what they have? The practical examples are readily available; the older couch goes from the main living room to the play room. The used car goes from you to the teenager. We re-use some paint from one room in another. Leftovers should still taste good the next day or beyond.
Back to the customer; you are hired this year and if you are lean enough you turn a profit this year. If it takes longer than that, all the more incentive to keep them longer. But how do we keep them? If you have a system that automates most task, this could be fairly easy but;
It starts with your underlying principals and philosophy
If you appreciate what you have and show it appreciation it will appreciate you back(stay longer!)
If you own a car and want it to last you’ll change the oil. It doesn’t mean the car has any less value. If anything, changing the oil(investing a little into an asset) makes the asset worth more since you can keep it longer and hopefully avoid costly repairs. Pardon comparing a human to a car but the analogy fits. Keeping a customer longer does not ensure that they’ll be profitable but you’ll have no chance at profitability if you let them leave.
The big wave is already happening in insurance. But maybe, actually definitely, those that can profit most from it will likely need to be accepting of a bit of an attitude adjustment. I’ve written on it before, let’s look at companies like Terracycle. Let’s look at Zappos. Heck look at any of your local businesses who you are loyal to. Now look at your insurance company/broker. Same feelings?
As much as new technology is needed, technology will not solve the underlying societal problems that have infiltrated insurance thinking.