One of the few daily ezines I read is Coverager which focuses on insurtechs. Here’s a dose of reality from their August 7 issue:
“As someone who is currently a lemonade and metromile customer and has filed claims with both of them, I couldn’t agee more. All my claims happened over email/phone from a chain of people who had pieces of the puzzle and kept calling me like telemarketers! The app was not used/involved in any of it.
“I am currently in the middle of a claim with Metromile and I have so many people calling me it’s nuts 🙂 No one ever cancelled an insurance policy because it took them 20 minutes longer to buy a policy. The focus on speed of buying a policy is misguided in the long term and will hit a roadblock once the early adopters (looking for low cost mostly) have been exhausted.
“But shifting a company to focus on truly customer centric claims is operationally very different from driving top line revenue which is what the investors/markets want. It’s a shift from transactional to truly service centric organizations with different incentives, org structures and values etc. That is very hard for most companies to do.
“For all the talk and PR around ‘customer centricity’, there are still very very very few genuinely customer oriented insurance co’s. We aspire to change that.”
— Ashish Soni, founder and CEO of helloOtto, in response to [Coverager’s] post titled When Harry Met Avi
Note: To view the subsequent LinkedIn discussion, click here.
Bill Wilson
Latest posts by Bill Wilson (see all)
- The Invisible But Potentially Catastrophic Homeowners Exclusion That’s Not An Exclusion - September 19, 2023
- Revisiting the Illusory Coverage Assertion Following a Claim Denial - September 19, 2023
- FREE Webcast: How to Survive and Thrive in a Hard Market - August 1, 2023
Bill whether you like it or not two things are happening.l One, the 60 40 rule of splitting the premium dolalr is ending. Two consumers are perfectly able to buy coverage with no aid or assistance from an intermediary. As thes e two revolutions move forward value and quality must follow. The organizations that fail to provide value for funds received will fail. That is how a market operates. Start ups are a threat to the established global cartel and the central banks that own or control them. Should be fun to watch.
In the interim of that evolutionary/revolutionary process, many good consumers will be harmed by not getting what they expected. Regulators have failed to invoke consumer protection tools that are already on the books in many states and have failed to mandate fair and reasonable disclosure to better equip the on-line buyer to understand differences among policies. The Pure Risk transfer process results in mandatory “adequate premiums”. The reductions in overage are often a way to lower the price by changing the actual pure risk in the policy language and take away coverages that are undifferentiated by the consumer who is lead to believe all polices are the same.
A;ll customers are currently adversely impacted by the oligopoly / cartel system now employed world wide. This approach combined with capital obtained outside the cartel is opening new and better opportunities of competition and price. You are supporting the stereotype of Big Blue IBM ahen they had a monopoly or ATT when they had Ma Bell. You did not receive the best product and you paid more than necessary.
Insurance is nothing but a service commodity. Increased and real competition will reduce cost and improve the benefit offered for each premium dollar. This is called a free market
My observations over the past decade or longer is that price competition is more likely to result in reduced coverage, not better service. When insurers compete on price-based “fast/easy/cheap” and they’re operating as efficiently as possible, the only premium components left to manipulate to keep premiums low are profit and losses. Since profit is a primary objective, that leaves losses. By far the easiest way to reduce the loss ratio component of premium is by providing less coverage and/or engaging in more restrictive claims processing. None of these paths lead to improvements for consumers.