Do we work in an industry riddled with dishonest people scheming to deceitfully and fraudulently misguide consumers? Apparently so, based on this article about the latest “disrupter” that was recently brought to my attention:
“How Will Ethereum & Blockchain Services like WeTrust Disrupt Insurance?” (Note: This article has now been removed.)
The author is apparently an “insurance professional” at Crum and Forster and also, according to the byline, a “Blockchain enthusiast, animal welfare & environmental preservation promoter, technology obsessed.”
I would suggest you peruse the article and you’ll find statements like this:
“[The insurance industry] truly is an antediluvian business that…has been riddled with fraudulent behavior…more concerned with dishonest, get-rich-quick schemes…confusing language used to show coverages and exclusions in an insurance policy is often an attempt to misguide and sway customers to purchase coverage that they do not need…Insurance companies also overcomplicate the language they use for the purpose of not having to pay out the full amount in the event of a claim…this deceitful nature of traditional forms of insurance…
“WeTrust has created a platform on this blockchain to enable users to share funds more quickly and safely with one another without having to go through the difficult process of finding the right type of insurance. Their service essentially eliminates the need for multiple insurance policies (auto, home, health, life, etc.) and creates one aggregated pool of funds that you can share with your closest friends and family.
“WeTrust also eliminates the need for hiring a broker or agent to work with you and the insurance company, which, in turn, saves both you money, time and effort. The traditional system of outsourcing to a brokerage firm to give a percentage of your premiums paid into the insurance service is outdated and a complete waste of resources from both the customer and company perspectives.
“Why should you pay an additional amount in premium on a monthly basis just so you can pay a broker a glorified finders fee?”
You can learn more about the WeTrust Vision here.
I don’t know about you, but my “closest friends and family” would have a very difficult time coming up with funds to pay a team of attorneys to defend me in a multi-million-dollar liability lawsuit, not to mention the indemnity cost if they lose. And what kind of a pool of funds could our “closest friends and family” accumulate, say, in a week to pay for two of our homes destroyed by a tornado? And, if everyone’s “closest friends and family” are above reproach, then who are all of these dishonest, deceitful frauds ripping off everyone? Aren’t they all someone’s “closest friends and family”?
I bet most insurance companies didn’t even realize that the reason they have complex, “overcomplicated” legal contracts (aka “insurance policies”) is not because of centuries of litigation interpreting them, but rather a conscious, deceitful effort “for the purpose of not having to pay out the full amount in the event of a claim.” And all you agents out there…what’s with these “glorified finders fees” you charge in exchange for absolutely nothing of value for your customers?
I wonder when I read things like this and watch the news daily if this time in history will someday become known as The Age of Enlightened Ignorance.
Bill Wilson
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Bill, I think you reacted too strongly to this one. The author is hyperbolic but she’s not wrong about how fraud drives complexity. And she acknowledges that fraud happens on both sides. You know probably too well that there are producers out there who resort to unethical and maybe even illegal practices to close a deal. It’s not offensive to suggest that there’s gotta be a better way of driving those practices out of the industry. Now Blockchain is probably the solution to that problem. The best explanation of what blockchain can do for insurance now is reduce transaction costs and payment periods. But she raised a good question: how do you make that complexity manageable? I know that insurance is a legal document and it should be treated with care and attention, especially when the consequence is bankruptcy, prolonged suffering or even death. But insurers have to do a better job of explaining to customers what they’re buying. There’s got to be a better way to do that than saying, “here’s your 15 page policy, good luck!”
I don’t think fraud drives complexity. I believe litigation does. My problem with the article is that it indicts the entire industry and the people that work in it. For example, these statements:
“…confusing language used to show coverages and exclusions in an insurance policy is often an attempt to misguide and sway customers to purchase coverage that they do not need…Insurance companies also overcomplicate the language they use for the purpose of not having to pay out the full amount in the event of a claim…this deceitful nature of traditional forms of insurance….”
State laws require Flesch Test compliance so that, at least grammatically, policy forms are readable at a 6-8 grade level. The complexity largely arises from decades of writing and rewriting policy provisions in response to court decisions that do not reflect the intent of coverage. The article says the “confusing language” is often a deliberate attempt to misguide customers and get them to buy insurance they do not need. That claim is bizarre and nonsensical. The article also claims that policy language is overcomplicated for the express purpose of not fully paying claims, another puzzling comment. All of this is attributed to the “deceitful nature” of insurance.
There are lots of things about this industry that can be done better and there is a need to weed out the dishonest and incompetent among us, but to claim that the industry at large is some kind of dishonest sham does nothing to accomplish that.
Do Insurance Agents Matter?
https://www.linkedin.com/groups/7036591/7036591-6282582230573342720