The Attachment Point – Slackchat #9: Misunderstood Insurance Topics

Welcome to The Attachment Point. This is our SlackChat content where volunteers on The Insurance Nerds Slack Channel (join here) discuss various topics. We do very little editing (so excuse the typos) and we try to keep it as conversational as possible. Enjoy!

 Tony Cañas: Question of the week: Which Insurance topics do you find people most often misunderstand?

Garret Juliano: The pool of risk concept. I would often get pushback from customers when I explained how the premium paid to the insurance carrier goes to pay for the claims of other drivers and so as the frequency and payout for claims rise, premium will rise as well.

Tony Cañas: I was reading complaints against carriers this morning (because I’m a weirdo like that), and I agree, a lot of the complaints are “I didn’t have an accident or a ticket and my premium went up. I called them to complain and they said there’s been more accidents in my area. Why should I get penalized if I didn’t have one myself?! Changing to another company!”

Tom Keepers: Agree with risk pooling. CFSI is doing research on consumer views…vids show some liken it to a casino in that the house “wins” yet the consumer expects to win. Who wants to “win?” Winning is a claim — no one should want to win.

Rob Galbraith: Where do I start and do I have to pick just one??? Seriously, all the concepts mentioned here are all use cases for insurtech disruption because they are so poorly understood by consumers. So you insurtech peeps, read this SlackChat!

Ryan Deeds: I think a fundamental issue is most consumers don’t care until they need to and then education is a little late. We spend lots of time trying to educate our clients and consider good clients ones that actually buy into the tcor reduction approach.

Rob Galbraith: Agree 100% Ryan Deeds but why do our products require so much education? Lots of things are complex products – but made easy to use, like a car or iPhone. Why can’t insurance be this simple? Sorry, getting side tracked…

 Ryan Deeds: Those are purchases you want. Insurance is never a product you want but one a capitalist society needs. I also think the carriers turn off the consumer by selling with fear. People get tired of it. Fine print is fine for the carrier but it sucks for the consumer. Which is why I think an agent still has a value proposition going forward. We want experts to say you are covered for anything you might run into. Sign here.

But is it sidetracked? The problem is we constantly talk about consumer confusion but a large part of that is apathy on the part of the consumer. For me apathy is the largest barrier to any of this

Rob Galbraith: Would making our product easier to understand reduce consumer apathy? Agree some part is human nature – losses happen to other people, not us. I don’t need insurance until…I do. But the technical parts and mind-numbing details that make insurance opaque do not help

Ryan Deeds: Lemonade made it simple, and we see what’s going on with them. I doubt very few of there customers dig into the details pre-claim.

Nick Lamparelli: I will make a pact now for anyone reading this, go to our YouTube channel: I will be making a video for each topic addressed here!

Tony Cañas: That’s a big commitment Nick, might take you a year!

Tony Cotto: The role and powers of the Insurance Commissioner are profoundly misunderstood, even by most others inside the government.

John Peterson: I would say Loss assessment on homeowners.

Eric Lindbloom: From a claims perspective, the most difficult concepts for consumers are the concepts of Depreciation and Actual Cash Value.

Nick Lamparelli: @Tony Cotto, that is very true. Most companies I have worked for fear the regulators and only deal with them when they must. But as Lisa Miller said in my podcast, it’s best to be proactive with them. I’d like the blog to spend more time writing about this topic and would love to have you on the podcast to discuss more!

John Peterson: – I will do a short video on loss assessment in the near future.

Eric Lindbloom: I’ll also do a short video on Depreciation and ACV – definitely misunderstood and definitely a settlement method guaranteed to cause conflict at claims time.

Tony Cotto: @Nick Lamparelli, I can not tell you how often during my time at the NAIC we would go into meet with members of Congress and their staff who would say “so you’re here for the Insurance industry?” Cue forehead slap.

Eric Lindbloom: @Nick Lamparelli, Word tracks matter when trying to explain to policyholders. Need to relate it in words and examples they understand. I and my team have developed many techniques and word tracks. If you would like to discuss, let me know

John Peterson: @Nick Lamparelli, it’s a real headache in Florida with Loss assessment with hurricanes

 

 

 

About Carly Burnham

Carly Burnham began her insurance career in 2004 as an office assistant at an agency in her hometown of Duluth, MN. She got licensed as a producer while working at that agency and progressed to serve as an office manager. Working in the agency is how she fell in love with the industry. She saw firsthand the good that insurance consumers experienced by having the proper protection. When Carly moved to Des Moines in 2010, she decided to commit to the industry, and she completed her CPCU in one year finishing it in 2012 and attending commencement in New Orleans. She completed her MBA at Iowa State University in 2014. During this time, she and Tony founded a Gen Y Associate Resource Group at Nationwide in Des Moines. After they had both left Nationwide, Tony recruited Carly to co-author and manage InsNerds.com. She has the difficult task of keeping his constant flow of crazy ideas focused and helping to flesh them out into useful articles. Carly enjoys sharing knowledge and ideas about the future of the industry and finds the website a good outlet for this passion. Carly is involved in the the CPCU Society Underwriting Interest Group. She also writes "Next Wave" a monthly column in the "Perspectives" section of Best's Review.

1 thought on “The Attachment Point – Slackchat #9: Misunderstood Insurance Topics”

  1. I have a Tuesday morning men’s coffee group, mainly a bunch of neighborhood retired guys, about half of who live in an HOA. Yesterday morning I explained how Loss Assessment coverage works (using two recent examples in the news, one being a $20M judgment against an HOA following a swing set injury), why they need it, how little is provided by most HO policies, and how cheap it is to bump the limit from $1,000 to $50,000 – $100,000. Two of them were going to call their agents yesterday to increase it.

    Unlike Lemonade’s claim, the policy itself is not what needs to be revised because preciseness in language for the courts is critical. What needs to be changed is how we explain the policy and educate consumers. Imagine if GEICO and Progressive took their $1.5+ BILLION advertising budgets where all they do is harp on price and used that time to actually educate consumers. I suspect an uneducated market works better for them.

    Reply

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