In researching a webinar on the (alleged and erroneous) commoditization of insurance, I came across this quote cited in the book The Language of TRUST…Selling Ideas in a World of Skeptics by Michael Maslansky:

”  – Marty Numeiers in the book ZAG

Does this sound familiar? These are the 10 circumstances enumerated above in which successful branding wins:

  • Category is confusing
  • Comparison is difficult
  • Price is high
  • Interest level is low
  • Standardization is needed
  • Benefits are intangible
  • Features are technical
  • Advantages are unprovable
  • Risk fact is high
  • Customers want prestige

Is insurance confusing to most consumers? Is it difficult to compare policies and insurers? Are insurance premiums high (at least in the minds of consumers)? Does insurance excite consumers? Are standards needed in products and market conduct? Is it hard to figure out which policy is best for a consumer’s unique exposures to loss? Is this largely attributable to the nature of insurance policies as complex legal contracts? Until a loss occurs, are the perceived benefits of particular policies and insurers unprovable? Is much at risk if a consumer chooses poorly? Is there any prestige of one insurer over another? Let’s examine these conditions one by one.

Category is confusing
Let’s face it, insurance is confusing to most consumers and business owners. We have conditioned them through incessant price-focused advertising that the only difference they need to concern themselves with is price. That distracts from the reality that they are entering into a complex legal contract where almost everything they own and a big chunk of what they might earn in the coming years is at stake.

Comparison is difficult
The foundation of the insurance industry are those pesky things we call insurance policies, each a complex, legal contract. Despite the erroneous claim that personal lines, particularly auto insurance, is a commodity, astute industry professionals recognize that there are potentially catastrophic coverage differences between policies and among the claim practices of the insurers interpreting those policies.

Price is high
There is little doubt that consumers and businesses perceive insurance premiums to be relatively high. After all, unless they have a loss, they’re paying for nothing (in their minds). And, if they have a loss, the perception is that their insurance premium will go up. But, given that many consumers and most businesses pay several thousand dollars in insurance premiums, the price of insurance is high.

Interest level is low
Most consumers consider insurance to be a necessary evil. Many would not buy it if the lender on their home or auto did not require it. Insurance is not a sexy product and it’s understandable that consumers and busy business owners prefer to minimize the time they spend on the purchasing decision.

Standardization is needed
Some industry old timers refer to the “bureau” days when policy forms were, in many ways, largely standardized, as was ratemaking. In some cases, state government organizations mandated rates, rules and forms and insurer issued insurance policies were audited for accuracy. Today, there is far less regulatory oversight and vetting of policy forms to the point that some industry voices are calling for mandated minimum coverage standards similar to state auto financial responsibility laws.

Benefits are intangible
All most consumers know is that they pay a premium every 1, 6 or 12 months in the hope that, if they have a claim, it will be adequately covered. The reality is that, on average, a consumer has an auto claim about once every 7 years and a homeowners claim about once every 10-12 years. This disconnect makes it difficult to perceive value.

Features are technical
Insurance policies are complex legal contracts. The variations in policy form coverages, exclusions and conditions, along with fact-dependent interpretation of these forms makes it difficult to figure out which policy is best for a consumer’s unique exposures to loss. A “deluxe” policy might provide overall superior coverage, but the unique circumstances of a particular claim might trigger an exclusion or limitation that is not in a generally inferior policy form.

Advantages are unprovable
Until a loss occurs, are the perceived benefits of particular policies and insurers unprovable? Probably. As noted above, the apparent advantage of one policy form over another may not always materialize as expected or predicted.

Risk fact is high
Every consumer is one tornado away from losing his or her home and a split second away from a negligent act that results in a liability claim that could take almost everything that person owns, along with a big chunk of income for the next couple of decades. Choosing the right product and vendor is critical to protecting against this risk.

Customers want prestige
Is there any prestige of one insurer over another? If you believe the “USAA for life” advertising campaign, there can be IF the carriers brand themselves in this way.


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Bill Wilson

Founder at
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