Tag Archives: low rates

12.28.15
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Maybe the insurance industry is just a reflection of society

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****

WHY?

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.

04.03.13
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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.

What about the rest of us?

Ask yourself this, How much is your loyalty worth?  In my opinion your loyalty is priceless.  That being said, how many physical dollars is your loyalty to a company costing you?  Could be hundreds if not thousands of dollars.  How does this happen?  Well, many people get lulled into thinking that staying with a company for a long period of time is some how beneficial. **Please get this in writing and show it to me***

I appreciate your loss free discounts, deductible rewards, bonus checks and whatever else may be the hot marketing flavor of the day.  Key word in there is MARKETING.  These are ploys to get you to stay around so you are less aware of what you are spending.

FACT: YOU SHOULD BE REVIEWING YOUR INSURANCE EVERY 12-18 MONTHS

That remains unchanged.  So why would you trade your loyalty and time for a potentially higher insurance rate?  No idea.  Might I suggest an alternative;

Look at what your insurance costs, typically best to think of the policies that tend to go together; auto, motorcycle, home, boat, umbrella, RV, rental property.  Basically where you live, what you drive and the things that go along with that.  Now see what the whole package costs, this is important.  Once you know your bottom line lets see how that goes up against your budget or more specifically what you would like it to be.  Now you can take advantage of any leverage you may have because of the policies you have in place.

FACT: MULTI-POLICY DISCOUNTS CAN BE WONDERFUL……

BUT

FACT: THERE IS NOTHING WRONG WITH USING MULTIPLE COMPANIES TO MAKE A SOLID PLAN

Now, it is important to know, just because a company can do a lot of advertising doesn’t mean they are worth you giving them more than a year or two.  PLEASE do not allow marketing to influence your bottom line.  Instead establish your own baseline for what your package should cost than make the company earn your dollars by staying consistent over time.

LOYALTY IS EARNED NOT BOUGHT

Just some suggestions.

 

 

04.02.13
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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?

Even worse continued; A local Allstate agent sends a ridiculous letter.  First it is on cheap yellow paper, color is ok but please invest in your marketing if you want a return.  This was a solicitation for home insurance yet they had obviously not looked for new information; I was sent a home replacement cost of $200,000, currently my coverage is at  $300,000.  Also, I have never been at $200,000 and every estimator I know of would never have even come close.    That is bad marketing and pretty irresponsible; Why would I want to hire you?  A couple of lines down is $100,000 in liability coverage.  Seriously, let’s look at this agent’s policy and see if she has $100,000 in liability.  Lot’s of bad to be thought about as an insurance agent but if this is a solicitation why would I call someone that put together such awful numbers.

In both these samples the agents did not even attempt to bring any value to me or whomever else received the letter.  If you want results you need to apply some effort.  If all you can talk about is price maybe you should talk to your customers more and find out what they want to here, maybe even why they hired you.

IF YOU CANNOT BRING VALUE DON”T LEAN ON THE CRUTCH THAT IS PRICE.  INSTEAD FIGURE OUT HOW TO BRING VALUE SO YOU DO NOT NEED A CRUTCH.

Yes, it is easy.  Unless of course you consider giving some effort hard.  Either way just some thoughts.

10.12.12
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Did you know….

That by taking minimum coverage, $25,000/$50,000 in New York you are actually setting yourself up for higher rates.

That I tend to see this coverage more often from the company that does the most advertising.

That your low rate actual makes you pay higher coverage and in the event of an accident could hinder you financial for years to come.

The difference between minimum coverage($25,000) and better coverage($100,000) many times is about $5 a month.

That I cannot think of a circumstance that I would ever do this disservice to anyone.  But then again I don’t provide quotes or promise you cheap insurance.  Who wants to buy cheap things anyhow.

Thanks for reading.