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September 12, 2017

A Response to Some Insurtech Claims

Summary:

Every insurance startup or insurtech company is telling us how it's planning to disrupt the insurance industry. Sure they are.

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There’s a popular word this year that I’m really tired of. It may not be bothering you so much, but I’ve read it so much that it’s become this year’s “it is what it is” for me.

“Disruptive”; adjective; relating to or noting a new product, service or idea that radically changes an industry or business strategy, especially by creating a new market and disrupting an existing one: (dictionary.com, definition of “disruptive”)

Every insurance startup or insurtech company is telling us how it’s planning to disrupt the insurance industry. They’re going to single-handedly turn the insurance world on its ear by the magic of big data, custom apps and chatbots. Here is what their story seems to be, “The insurance industry has been asking you crazy questions, ripping you off and enriching themselves at your expense. We’re here to stop all of that.”

See also: Harvey: First Big Test for Insurtech  

Over the next few weeks, I’ll give you a few statements, their implications and (I hope) a reasoned response to them. After a couple of hours of writing, I looked down and saw how long this had gotten. I decided that it would be serving you best by making this a short series, rather than a (very) long article. You’re welcome.

Here we go.

Statement #1: We do good!

Lemonade wants you to “forget everything you know about insurance.” They are going to give you: instant everything, killer prices, big heart. They made a big splash recently announcing their 2017 giveback.

Implication: The insurance industry does not do good. Insurance companies take your money, give you nothing in return and, to top it all off, don’t do any good for you, your community or your planet. We’re the good people. Buy insurance from us and be a good person, too.

Response: I reviewed Lemonade’s website, and I have determined that they’re not doing any more good than other insurance companies. You might argue that other insurance companies are doing even greater good than they are.

A quick thought about their “forget everything” mantra before we move to the meat of my response: I reject their “forget everything” statement. I sat at my desk with a friend of mine who’s an underwriter, and we walked through the application process. It feels a lot like other personal homeowners’ applications. So let’s park that forget everything bit. The biggest difference is that I don’t have an agent to talk to; I have a chatbot and a website.

On to my response on their statement: The rest of the insurance world does good, too. Let’s look at a few ways that insurance does good.

  1. The insurance policy is a good thing. People may doubt that when they buy their insurance, especially if they never have a claim, but just about the time you think you won’t need your insurance and wish you could cancel it, that’s when you have a claim. My son had an accident about two months ago in his new (to him) car. The accident did about $8,000 of damage to Sheila (his car; his second love. Stop laughing.) Because he’s making payments on the car, do you think he could pay for the repairs and the two months he had the rental car? I don’t think so, either. When you can’t retain the loss, the insurance policy is a really good thing.
  2. Insurance people are good people. Having been in the insurance industry this long, I’ve met a lot of insurance people. They are constantly doing good. Some volunteer on boards of universities, colleges and non-profits. Many volunteer with different non-profits, like churches, the Humane Society in their area, hospitals, etc. My prior company hosted monthly blood drives; gave to the USMC Toys for Tots program; and had a community program that gave employees time off to serve our community. Another company that I worked for participated in the adopt-a-highway program in central New York. Fun days, in the median of Interstate 81, cleaning up bag after bag of trash. My current company is a big supporter of IICF. What’s that? The Insurance Industry Charitable Foundation. Take a look.
  3. Search “insurance company charitable giving.” That search makes this final point. I don’t need to elaborate any further. The industry makes it clear that we’re interested in helping the world around us.

See also: 10 Insurtechs for Superb Engagement  

Can we stop with the rhetoric that insurance companies don’t do good?

Next time, we’ll discuss statement #2: It’ll just take a few seconds!

This article first appeared at www.insurancejournal.com.

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About the Author

Patrick Wraight is the director of Insurance Journal’s Academy of Insurance. His goal is to help the industry to see the Academy the way he sees it: as a valued partner in the training and development of insurance professionals.

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