Recently, one of my blog subscribers, Helen Goss, CIC, sent me a link to an insurtech ad that answered the question that is the subject of this article. If you click on the word “link” in the last sentence you can see that, according to insurtech startup Jetty, you can buy renters insurance from them faster than you can make a cup of coffee.
Yeah, sure, protecting everything you own and protecting your assets and income over the next 10-20 years has the same level of importance as making a cup of coffee. That’s what some of these startups want you to think. It’s all about convenience and the “customer experience,” aka fast, easy and cheap (something I blogged about a couple of months ago if you click that link). No big deal.
A couple of years ago, I put together a seminar I called “The Reports of My Death Have Been Greatly Exaggerated: Commoditization, Disruption, and the Imminent Death of the Insurance Agent.” In it, I talked about the evolution of the “fast/easy/cheap” mantra by showing a slide with the following times that the auto insurance provider listed needed to place your insurance:
GEICO 15 minutes
Esurance 7.5 minutes
Metro Mile 3 minutes
Insurify 10 seconds (from a license plate photo)
The reality is that these providers can’t actually place or even quote your insurance in seconds or a few minutes. For example, Jetty’s (the “insurance faster than coffee” entity) web site cautions:
“In order to obtain insurance coverage, you must submit a complete application through our Site or our Services. Issuance of insurance will depend upon underwriting approval.”
Another insurtech whose sales pitch also follows the “I have the need for speed” Top Gun mantra (maybe this is why they call them disrupters or “Mavericks”) is Hippo, an online homeowners insurance vendor that says:
“60 seconds on average, to get a quote (we’re pretty sure it’s the fastest online!)”
Their home page says they have “Smart Coverage for Homeowners” yet another page is full of misinformation about homeowners policies offered by others. If you want to read more, you can go to this insurance industry web site and read essentially a PR article written by a staff member of the company (but it will likely cost you $12.95 for that privilege).
Another homeowners insurtech darling is Kin which is discussed in this Value Penguin article: “Kin Home Insurance Review: Cheap Rates Coupled With Maximum Convenience.” Cheap and convenient. At least Value Penguin identifies the apparent focus of the carrier in the article.
In addition, in the insurtech cheerleading article “How Tech is Eating the Insurance World,” the author asks the question:
“Why not offer homeowners insurance in 15 seconds (not minutes) through fully digital workflow like Kin does?”
Why not? How about because 15 seconds (or 15 minutes) is a ridiculous time frame for assisting individuals and families in identifying their serious or potentially catastrophic exposures to loss, particularly liability risks, and properly insuring or risk managing them.
If you thought you might have a serious health issue, would you make a choice of physicians based on who advertises that they’re the cheapest and/or they can get you in and out of the examination room in just 15 minutes? Of course not. So, why would you use those criteria when your financial health is at stake?
But it gets worse, as illustrated in this PG-13 rated video commercial from Swyfft:
“Some things should last more than 10 seconds. Buying homeowners insurance is not one of them.”
Then there’s Pact Insurance, though they grudgingly admit that they need 90 seconds to “offer customers tailored coverages and services” and they claim that you would “Get a full policy from your phone in seconds.” When asked, “Do you have service agents?” they respond, “Yes. And when we say service, we mean it. Agents are here to help you, not to sell you on coverages….” Heaven forbid that an agent might help you identify your exposures and actually provide the coverages necessary to minimize an uninsured loss.
And let’s not forget Aviva’s “Ask It Never” concept whose goal is not ask ANY questions on an application.
As many of you know, I could go on. And on. And on. However, I have to run…I’m getting one of those 15 second haircuts on my way to my 15 minute dentist appointment to get a tooth extracted.
BUT, before I go let me leave you with this very short blog post from Seth Godin:
The unskilled cost accountant might suggest you outfit your new hotel with cheap shower curtains. After all, if you save $50 a room and have 200 rooms, pretty soon, we’re talking real money.
On the other hand, experience will demonstrate that cheap shower curtains let the water out, causing a minor flood, every day, room after room. And they wear out faster. Cheap shower curtains aren’t actually cheap.
Productivity pays for itself.
Once you start looking for metaphorical cheap shower curtains, they’re everywhere.
As Seth’s metaphor implies, once you start looking for cheap insurance, you’ll find it everywhere. Caveat emptor.
Bill Wilson
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Responding to this LinkedIn post:
https://www.linkedin.com/feed/update/urn:li:linkedInArticle:6480921984120213504/
Anyone who has had an insurance claim, even a fender bender, knows how emotional the claim experience can be. In the case of a serious claim, the event and process can be emotionally devastating and the results financially catastrophic.
Startups who mislead consumers into believing their exposures to loss can be identified and properly insured in a matter of seconds or even minutes have no place in this important industry. Nor do insurers whose advertisements imply that the only important difference between insurers and insurance policies is price. Too much is at stake.
In a career that spans five decades I’ve seen scores of lives emotionally devastated and financially ruined because they chose poorly. Enough of this nonsense. Someone’s financial health cannot be properly protected in seconds or minutes any more than their physical or mental health can be diagnosed and treated in a 10-minute office visit to a healthcare professional.
Insurance is an industry and insurance sans the misrepresentation perpetrated by the insurance industry is no more difficult to understand than any other service provided.