Tag Archives: state farm

06.24.13
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The perfect crime, insurance edition

Just read this by Seth Godin; The Perfect Crime a very similar thing actually occurs in Insurance.  Thanks for the idea Seth.

I cannot factually speak on any of the lobbying or NAACP points.  Instead here is what I do know.

None of the insurance advertising you see actually shows you how to be a better consumer in the long term.  The companies only concern is on switching your insurance this year which, since the cost to acquire customers is high, is pretty stupid.  It takes several years to turn a profit on any individual, why would you only advertise for this year?  Because you are conditioning the masses.

Most of these “masses” also generally do not have a lot if any significant claims.  Yet millions are spent on advertising claim services.  An almost FACT, since this is from my experience, is most claims go fine.  Figure they would be grade a “B” or higher each time.  Let me know any service you have that is always an A+.  A couple of basic, proactive steps is all it takes to keep things going smooth.

Oh but you can “bundle and save”  or get a “discount double check”, etc, etc.  As I have said before, credit , plays a bigger role than just about anything else.  But of course we could not advertise the truth so let’s hide it with discounts whose collective impact is not nearly what credit + home ownership+education+marital status equals.

And the loop continues.  Instead of getting excited, like a mime saving $706 realize you missed  a shift in the market.  The goal each year should be to save between $0 and $300.  Reality is the higher your savings the longer you have been overpaying.  ***Yes, of course driving records clean up, people get married, etc.***

Either way, he could have written on a myriad of topics that marketers exploit.  Would love to see his take on insurance.

Thanks for reading, just some thoughts.

10.29.10
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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 too 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 affect you, your family, your livelihood and your wallet? 

FACT, every company I have encountered offers the usual four discounts your car qualifies for; anti-lock brakes, airbags, daytime running lamps and alarm systems when it comes to cars.  Maybe you get another discount for using your car a limited amount of mileage, national average is about 12,000 miles per year.  Maybe you get a multi-car discount if you own additional cars.  After this, it starts to get interesting which makes it almost impossible to accurately compare companies.  Be careful, ask lots of questions and review your policy each year.

5/12/2015  Updates

The lesson here is the statements above really have not changed.  Rating engines(the algorithm behind the companies) are more sophisticated than when the post was written.  What does that mean?  It means that the percentages and advertised discounts are less important than they were at the time of this post. There can be wild swings in your rate but this is more based on changes to your personal status and chaaracteristics than anything else.

The larger companies still have not learned how to advertise their “product” and have instead allowed it to become commoditized.  This is actually a good thing for you despite the confusion.

Beyond that, the facts are the same; determine the coverage levels you are comfortable with.  Shop accordingly.  Plan on remaining in the upper portion of the available market instead of trying to find the lowest.  You’ll save less money by overshopping than you will be doing a reasonable amount of shopping.