An Open Letter to Everyone Writing About “Disrupters” and the Insurance “Customer Experience” and Citing “Industry Experts” and “Top Insurance Executives”

 

For the love of God, please, please, PLEASE stop comparing buying insurance to buying a consumer product on Amazon!

Case in point from an “industry expert”:

“What’s holding most insurers back from meeting the speed and performance of a customer experience leader like Amazon? In a nutshell, siloed legacy systems.”

No, siloed legacy systems are NOT why the insurance industry doesn’t meet the “customer experience” speed and performance of Amazon. The reason the insurance industry doesn’t meet the “customer experience” provided by Amazon is because WE DON’T SELL WHAT AMAZON SELLS! Amazon sells consumer products. “Insurance” is not a “product.” If you’re compelled to label it, insurance is a process, not a product.

Another case in point from a recent Reuters article that quoted Ajit Jain, Berkshire Hathaway’s “top insurance executive” as saying:

“Amazon.com can deliver something to you in four hours. If people can buy paper towels on the internet, why not insurance?”

Sorry, sir, but buying insurance is NOT the same as buying paper towels. Yes, technology can and should be used to improve the effectiveness and efficiency of the insurance process, but phone apps and “big data” are not going to make a silk purse out of a sow’s ear. (BTW, there are some great silk purse bargains on Amazon right now if you hurry, and the good news is, choosing the wrong one likely won’t bankrupt you, as can happen if you choose the wrong insurance “product.”)

Not every buying transaction can or should be reduced to an Amazon-like “1-click” purchase. If I want to buy paper towels, does Amazon need to ask me to explain what I’m going to use them for? Or who is going to use them? Or where I’m going to use them? Or…? The insurance PROCESS starts with assisting individuals, families, and organizations in identifying their many, and often unique, exposures to financial loss. That information is then used to determine what is the best combination of insurance policy forms and risk management techniques to minimize the likelihood of a serious or even catastrophic financial loss. And if there is a loss occurrence, the process continues in both a financial and emotional way.

“Insurance” is not a commodity product. It’s a regulated, service-oriented process where the “product,” if you will, is a complex, detailed legal contract that is highly litigated. To compare it to paper towels or any other online consumer purchase is infantile. How many bad Amazon purchasing decisions can lead you to financial ruin?

“Technology is a tool and a means to an end, the ‘end’ being protecting individuals, families and organizations from financial catastrophe.”

Why do we listen to and enable people that lack historical perspective and clearly are fundamentally clueless about how the insurance industry works and why it works that way, who really don’t understand the overriding mission of this industry? Technology is a tool and a means to an end, the “end” being protecting individuals, families and organizations from financial catastrophe. Unless it’s the product “disrupters” and consultants are selling…then it’s the end in and of itself. Caveat emptor.

Photo by JeepersMedia

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Bill Wilson

Founder at InsuranceCommentary.com
One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America. Reprint Request Information

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