Bring Back the Love: Misconceptions Strain the Insurer-Insured Relationship
Each year in February, we celebrate love. Not just romantic love, but love in general. Valentine’s Day cards are exchanged between sweethearts, teachers, parents, friends, even our barista. Stores fill up with candy hearts, teddy bears and chocolate. Does this worldwide celebration of love remind you of your insurance carrier? Probably not. A longstanding love-hate relationship seems to exist between the insurance-card carrying public and their insurance providers.
Why do we love insurers?
We need them. They provide a safety net to protect against the financial loss of the unexpected—serious illness, catastrophic natural disaster, lawsuit, theft, disability. Insurance can lessen the financial risk of an unexpected event and provide some peace of mind, often providing additional noninsurance benefits.
When you experience a major unexpected event, and your insurer comes through with good service and payment for a loss, they can literally be your superhero.
Why do we hate them?
Insurance is often seen as a necessary evil. The reasons are many but chief among them are: Coverage can be expensive and expansive, with an often inverse relationship between the ability to pay and need for coverage. Policyholders filing a claim are often stymied by limits and exclusions. Policy language can be intimidating and hard to understand. There are some bad players. (Not all insurers are created equally, and will do anything to disallow a claim and hold up payment.) Mandatory insurance is disliked and most insurance is coverage you hope to never need to use (“it won’t happen to me”). The insurance industry has been unable to shake its reputation of charging too much and having too much money. There is a perceived lack of value; a satirical video created by Cracked.com “If Insurance Companies Were Honest” quips, “We don’t protect you from anything. We just give you back a small portion of the money you were forced to give us.”
Don’t get me wrong—I believe in insurance.
Insurers offer a valuable service and the overwhelming majority do so responsibly, with excellent customer service. I also believe the insurance industry does a fabulous job of self-regulating and ensuring funds are available to meet the needs of policyholders without being excessively capitalized. But in the battle of good vs. bad press, the insurance industry historically has lost and continues to do poorly—and it seems to be almost entirely due to misconception. Too many people still don’t seem to trust insurance companies.
It’s changing, but slowly.
Innovative approaches to insurance are popping up offering hope for changes in the way insurance is perceived. The simplified pricing and policy language adopted by Lemonade is one such example. Other positive changes include coverage flexibility (Progressive’s Name Your Price Tool), debunking common insurance frustrations (Liberty Mutual’s “See car insurance in a whole new light” campaign), and ensuring claim coverage, even for the unusual (Farmer’s “Hall of Claims” and Allstate’s “Mayhem”). It’s a start.
To survive as an industry, we need to continually work to clear away the misconceptions that have plagued us, do a better job communicating the concept of insurance being for the greater good, and learn how to connect with our customer bases more effectively to bring back the love.