I received this email last month:

I attended another conference yesterday: OnRamp Insurance. Lots of talk about tech and customer experience. No talk about coverage and language and why it matters.

My response:

Has there ever been an insurtech conference where someone speaks as a devil’s advocate to point out some of the problems or issues with trying to insure someone in 60 seconds or with dubious “big data”?

I just wrote about an insurtech homeowners quote I got last year where my home’s square footage was understated by 1,200 sq. ft. resulting, in part, in the Coverage A limit quoted being at least $200K too low. I did another quote a week or two ago at the same site and my square footage was OVERstated by 1,600 sq. ft., though the quoted Coverage A limit was still below what I know to be the correct replacement cost.

I just wonder if the organizers or participants in these events simply don’t want any naysayers to rain on their parade. The thing is, the technology could be used to do a better job than many agents if the insurtech industry would just get away from the misguided premise that what consumers want and need is fast, easy and cheap. What consumers might want and what they actually need are two completely different things.

As I’ve said before, when my son was a few years old, he would have happily subsisted on a diet of chicken nuggets and gummy bears. That was what he wanted, not what he needed, because he was ignorant of nutrition in general and the nutritional value of such ‘food’ in particular. The same is true with regard to consumers and insurance. It’s a combination of ignorance and the perception, fueled by our own industry advertising, that insurance is a commodity differentiated only by price.

Instead of easy/cheap/fast, easy/cheap/better is quite possible. There’s a semi-insurtech that provides a commercial lines market. I looked at their application/exposure analysis  system a few years ago and it was VERY impressive. The questionnaire/checklist series of questions involved a lot of exposure analysis. It wasn’t fast by any means, but it appeared to be very thorough.

THIS is where insurtechs could take the industry if they had a clue what they were doing.

Instead, they cater to the base instincts of people because of ignorance or avarice. They’re looking for quantity, booking as many policies with as minimal effort as possible. Cash flow. The fact that they dishonestly or misguidedly lead people to believe they can really sell them insurance in 60-90 seconds makes me think there is more than just gross ignorance involved. If they actually understood the industry and what is at stake for the public, they would know the Amazon “one-click” approach isn’t suited for what we sell. Insurance policies have lots of endorsements for a reason…unless they’re building in a lot of those coverage options, there are people with lots of coverage gaps that don’t have to be there.

The insurance industry is founded on good faith and good faith means a lot of things that don’t seem to be part of the business model of a lot of insurtechs. If we consider ourselves professionals, there are certain characteristics of being a professional that we have to meet. One of those is altruism. I don’t see any real altruism, for example, coming from a company like Lemonade other than the charity perception they like to give lip service to.

When I got my online homeowners quotes, they never asked me about my boat dock. Assuming they’re using state of the art data resources like satellite imagery, something in their system should have told them that I live on a lake and have a $40K covered boat dock. They should also have access to information that tells them the dock is on Army Corps of Engineers property, not MY “residence premises.” As a result, they would have issued me a homeowners policy with a $40K gap for that exposure alone.

On our neighborhood NextDoor app, someone said they had a slip on their dock that was available for renting. That makes their dock used for business, necessitating another endorsement to cover that exposure. Does anyone at this insurtech know this? Does anyone at this insurtech really care that they may have a book of business full of people who have potentially bankrupting uninsured exposures? I doubt it. Too cool to care.

Would a traditional agent ask these questions? Many would not, so I don’t blame this attitude just on insurtechs. There is plenty of room for improvement in traditional channels. That’s where I see the role of technology. Automate processing as best as possible and use RELIABLE information resources to streamline the processes. That should give knowledgeable, caring professionals, with the assistance of AI technology, to devote most of their time to exposure analysis, risk management, advocacy, and education.

The industry needs disruption and can benefit greatly from technology, but not the kind being offered by most of the insurtechs I’ve looked at. Everyone knows the U.S. has a great need for rebuilding infrastructure. If we let the equivalent of insurtechs do it, they’d be rebuilding bridges with matchsticks.

This message needs to be shared at insurtech conferences, but I’ve not seen any indications that it is.

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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