The most powerful paragraph in insurance

AKA  My and the Insurance/Banking industry’s simultaneous biggest problem and opportunity

AKA What #insurtech should be trying to solve but outside of me and maybe some people I have not found yet, is not.

Really it is two paragraphs.  One that comes from a standard document that you’ll find in your policy forms. Yes, I know you likely do not read them.  Also, the version in your state may be different.  The other is a direct quote via an email.  I see or hear variations of the second one every week.  So here goes;

Rethinking claims and the causes

***Working thought, from an idea via a longtime friend***

So the scenario is quite common, friend calls and says they want to have some tree work done on their property.  Pretty common.  You can also insert, new roof, new furnace, upgrade to electric panel, drainage dug, fire alarm installed, etc.  Think of it as any proactive, likely preventive measure that can reduce the likelihood and at worse the severity of a claim.

“Bill, is there an extra discount for cutting down the trees?  Will they(the insurance company) pay for it?  ”    No and No.

Math and value and flood insurance

Woke up early and was immediately thinking about one of my last conversations yesterday.  Let’s start with some math;

If you spend $1000 and in return I lower the cost of something by about $3000 what could you consider your return on investment(roi)?  $2000 not bad.  Not bad at all.

So in the first year of this new product you saved $2000 by spending $1000.  Now in the second year(assuming current numbers stay the same) you actually save $3000 since you do not spend the $1000 again.  So you have now made $5000 by investing $1000.  500% return.

Big portions = insurance discounts

Stumbling through any amount of commercials can be entertaining and also very revealing.   Many times entertainment takes precedent over information.  Actually more times than not things are done to get your attention in the hopes that  you will provide some attention/dollars to their product.

I have harped on insurance discounts for a while, bottom line is any list of discounts you can provide does not out do your characteristics.  Your credit score, education, residence and marital status mean way more than all the discounts.  But talking about this, the facts, is not appealing so we disguise it with discounts.  Same thing with food.

Is time the best Insurance Discount?

It might be.  It might also be the most under used and least asked about.

If you are between the ages of 16 and 25 your lack of time on this planet is a reason why you spend more on insurance.  BUT what if you pay attention?  Maybe you start on your parents policy and make sure they have solid coverage so when it is time to switch you are in a better position.  Then, typically after three years of being licensed, it is time to shop.  Now just stay on top of things because you get a little older you can likely improve your rate, assuming a clean to fairly clean record.

Price versus value

Want to change the discussion from Price to value?  STOP ADVERTISING PRICE.  Advertising on price is the easy way.  It is basically telling the consumer we are a commodity and can not come up with anything original that might bring some value to your life.

Want some evidence?  Follow your mail for a month and count the generic garbage being put in front of you that thinks your only concern is price. Even worse , I received the same exact awful letter from four different State Farm agents.  Not only is it an awful, demeaning marketing piece but why does State Farm allow there agents to cannibalize each other?

So you want a lower rate…

  • Improve your credit score…huge factor can make a bad driving record irrelevant
  • get a college degree…it helps but not everyone
  • own a home/condo..helps a lot and gets a multi-policy savings
  • take a defensive driving course..boring but profitable
  • make a point to review ANNUALLY
  • Know the value of your car…Do you still need physical damage coverage?
  • Be loyal to a good agent not a company….nuff said
  • take higher coverage…you’ll look better when shopping

Insurance has been commoditized set your coverage plan than your rate!!!

Saving money is bad…sometimes

You hear it constantly on the radio and T.V. It shows up in your mail on a weekly if not daily basis, heck a banner ad probably popped up before you even got here.  Each insurance company quoting exactly how much money they can save you or how many discounts are available and rarely getting specific on coverage.

Yes, I think saving money can be bad.

If you have not taken the time to review your insurance plans on a regular basis you may actually be saving too much money.  Yes I just said too much money.

Discounts or advertising

Enough already with “…with discounts up to 40%” or “..15mintues can save you…”  or ” the more policies you have the more discounts…”

  • Is it really a discount if your base rate is to high to begin with? 
  • Is it really a discount if you have to purchase a policy you don’t already have to get it? 
  • Would you only give your accountant, doctor, lawyer or even your mechanic only 15 minutes to review something that can effect you, your family, your livelihood and your wallet?