The Comparative Rating Illusion

Independent agents have been doing comparative rating for decades. And, in person or online, it’s a dangerous thing.

Speaking of comparative rating…. I was just reading an Insurance Journal article about where the CEO referred to the semi-startup as a “disrupter.” Disrupting what? Independent agents have been doing comparative rating for decades. There is nothing new or disruptive about doing it online. And, in either format, it’s a dangerous thing.’s CEO says that what consumers want is choice: “If you come back to that as the fundamental premise, do you want to walk into your grocery store and be offered one option for soup? Do you want one option for fruit? No, you want lots of options. Do you want a simple way to shop for it? That’s what does.” See also: It’s Rush Hour in Telematics Market   For the nth time, “insurance” is not a product you buy off a store shelf. Why do these people keep making comparisons to consumer products? I guess the upside is that at least he didn’t throw Amazon into the mix, as I wrote about in the blog post “Insurance and Paper Towels.” And what “choice” does comparative rating provide to consumers? Would this premise work for buying, say, used cars? Let’s see what choices would give us: Ford       $4,167 Chevy    $8,246 Honda   $8,963 Toyota  $5,920 Kia         $6,743 Need a boat? Just go to Bayliner            $48,450 Crest                 $27,248 Chapparal        $51,506 Regal                $86,727 Bennington     $34,999 Easy choices. I’ll buy that Ford and use it to tow my new Crest boat. After all, the only thing I need to know is the manufacturer and the price, right? Similarly, in the case of insurance comparative rating, all I need is the name of the “manufacturer” (aka insurance company) and the price (i.e., premium), correct? Needless to say, NOBODY would buy a car or a boat with only the information provided above. Then why should consumers be expected to buy insurance sold that way? The answer to that question is easy…because we’ve conditioned them to believe that the only thing that matters is price. Any true insurance professional knows that, but apparently few insurance professionals make decisions for insurers when it comes to advertising. See also: How Technology Drives a ‘New Normal’   Even in independent agencies, we are all too eager to simply plug some information into a comparative rating system, then tell the consumer which quote is the lowest, without any regard for which carrier, product and service is the best fit for their unique needs. If this practice continues, we might as well concede the industry to the startups (and entrenched carriers) that sell on price and/or convenience, as opposed to providing a real, professional service that helps consumers avoid catastrophic loss.

Bill Wilson

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Bill Wilson

William C. Wilson, Jr., CPCU, ARM, AIM, AAM is the founder of Insurance He retired in December 2016 from the Independent Insurance Agents & Brokers of America, where he served as associate vice president of education and research.


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