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What Is the Future of Comparison Sites?

It’s no surprise that in the last few years how consumers shop for car insurance has changed drastically. Third-party comparison sites that provide car insurance quotes have taken the industry by storm, giving consumers the ability to shop, review and switch insurers faster than ever. But what does the rise of these sites mean to customers, and to insurance agencies as a whole? And where does car insurance shopping go from here?

Consumer Must-Knows

Getting a car insurance quote online through a comparison site may seem hassle-free, more efficient and more relevant, but as the industry evolves there are two main points consumers must be aware of:

1. Hassle-Free Doesn’t Mean Quicker or Accurate:
One of the main customer value propositions of car insurance comparison sites is their ability to quickly provide insurance quotes for a variety of companies that sell in a consumer’s geographical location. The problem is that to truly get an accurate car insurance quote, consumers must be willing to provide more details than sites that generate quotes request.

For example, most comparison sites provide quotes after a consumer has put in first name, last name, Zip code, age and car details. Using public rate filings from sample data, these sites then provide an estimate of what your average annual rate may be. What this fails to take into consideration is all of the unique variables that companies use to determine your risk profile, which ultimately determines your premium.

In addition, no comparison site currently covers the whole car insurance market. Consumers that go to three different comparison sites will typically not only be shown different providers in their area, but also different prices for the same company. This is because comparison sites often have deals that prioritize partner companies over cheaper and better options.

See also: The New Age of Insurance Aggregators  

Consumers are only being shown select companies, and those companies’ quotes are most likely inaccurate. So consumers are going to multiple car insurance companies, filling out numerous driver profiles and then comparing the rates they are being shown. This can be more time-consuming than simply calling one, two or even three companies to get a direct quote.

2. Cheapest Doesn’t Mean Best
With third-party comparison and review sites putting the strongest focus on which companies provide the cheapest insurance, getting the right insurance coverage has taken a backseat. While using comparison sites may result in paying less, it can also result in being underinsured. Having the proper car insurance coverage ultimately is a step toward financial protection.

Take a driver who opts for the cheapest coverage, which only includes the state’s minimum car insurance limits of 25/50/25. Let’s say that driver is found to be at fault in an accident that causes $35,000 of injury to the other party. It is up to the driver to then pay $10,000 out of pocket to cover the difference between what the insurance company has insured them for and the cost of the damages done.

One problem with comparison sites is that prices for higher coverage limits are not shown because they aren’t the cheapest option. Consumers must not be tricked into thinking the cheapest companies are the ones best-suited for them. Instead, consumers should find a policy with enough coverage to fully insure them and their financial assets, and then turn toward the tools available to them for saving money for that policy.

How Comparison Shopping Affects Car Insurance Companies

Not only are customers being affected by comparison sites, but so are car insurance companies themselves, with there now being a fierce need for competitive prices. Never before has it been so easy for consumers to find rates at just a click of a button. And while there is a concern over the accuracy of these rates that are being shown, it doesn’t take away the fact that customers are seeing these prices, and insurance companies are having to take that into consideration.

How do companies combat getting a call from a customer who has seen a quote for $200 less than what that company can actually offer? Some have become exclusive partners with insurance shopping engines, possibly under the assumption that, if you can’t beat them, join them. Others are working to make sure their logo, their rates and their brand aren’t being displayed. But at the end of the day, neither of these are benefiting the customer.

What Insurance Shopping Looks Like 5 Years Down the Road

There is no doubt that consumers have preferred the ability to compare, review and get quotes from a number of companies in a matter of minutes. But it’s only a matter of time before the perceived ease of use wears off. For comparison sites to truly succeed, one of two things will need to happen.

  1. A site will need to build personal relationships with all of the top brands. Until then, we can expect that rates will be inaccurate and that insurance companies will be listed by comparison site’s bias toward their exclusive partners and not by what’s best for the customer.
  2. A comparison site will need to be just that but for other comparison sites in the insurance industry. Yes, you heard right. For the comparison business model to work in the insurance vertical, a comparison site will need to compare quotes, offerings, discounts and top companies being listed on other comparison sites. And while prices still may not be 100% accurate due to the nature of how insurance rates are determined, this could potentially solve the solution of company bias.

See also: Waves of Change in Digital Expectations  

Because we don’t see companies such as State Farm, which only allows its appointed agents to to sell their product, ever agreeing to option number one, we have to suspect option number two is the next best solution. Is it a perfect solution? No.

Comparison site shopping as we know it will have to change in the next five years. How? We will have to wait and see.

7 Tools for Cutting Insurance Costs in 2016

Pondering New Year’s resolutions? Check out these seven helpful insurance calculator tools:

If you’re like most Americans, one of your New Year’s resolutions probably involves cutting spending in the coming year. But, rather than planning to avoid expensive shopping sprees, consider saving money in other ways – like reevaluating your insurance coverage. This may seem like an overwhelming amount of work, but you don’t need to spend hours on the phone to find out if you can save money.

Instead of jumping right in with insurance quotes, consider using insurance calculators to get started – they require less personal information while still providing accurate estimates based on your needs. These seven insurance calculators are a great place to begin if you want to save money in 2016.


  1. Bankrate: Auto Calculators

To get an idea of how much you’ll be paying in car-related expenses every month, Bankrate provides you with a wide variety of automotive expense calculators. Once you have an estimate of how much you can save each month based on your interest rate and auto loan term length, you can then more accurately plan your auto insurance budget.

Additionally, while Bankrate focuses a lot of its research on automotive expenses, you can also learn more about home and retirement insurance plans with its other financial planning calculators.

  1. CarInsurance.com: Car Insurance Calculators

CarInsurance.com offers in-depth information about all areas of car insurance. The simple and organized layout of the calculator interface gives users easy-to-read results, and it provides additional explanations on overall cost and coverage.

The CarInsurance.com calculator section also serves to connect visitors to other informative resources that can help make lowering their car insurance premiums much easier.

  1. The Hartford: Car Insurance Coverage Calculator

The Hartford car insurance coverage calculator avoids using ballpark estimates, meaning that it requires specific details about your coverage needs to create a more relevant figure. While it does ask more questions than some of the other insurance calculators on this list, it is still an efficient and quick way to get customized results.

The Hartford calculator page also provides links to relevant articles that discuss different available benefits and options for auto insurance.

  1. HomeInsurance.com: Home Insurance Calculator

This basic calculator requires you to answer only three simple questions – ZIP code, square footage and home layout – to get an idea of how much coverage you need. The calculator also provides higher coverage ranges and explains the protection you can expect from each type of plan.

If you have questions about coverage terminology, the HomeInsurance.com calculator offers an extensive FAQ section.

  1. Liberty Mutual: Home and Auto Insurance Coverage Calculators

With an extremely user-friendly and visually appealing platform, the Liberty Mutual home and auto insurance calculators ask simple questions about your life to help you determine which plan is right for you. The home insurance coverage calculator tells you which areas you should be spending more to protect, while the auto insurance calculator allows you to see suggestions for towing and rental coverage. The major elements of the calculator are adjustable, making it easy to customize the estimate to reflect your needs.

  1. Geico: Coverage Coach

Like the Liberty Mutual tools, the Geico Coverage Coach offers estimates for auto and home insurance, but this calculator does both at once. The calculator gives accurate coverage estimates for a wide variety of demographics, and the platform is straightforward and engaging — it takes just a couple minutes to fill out the seven simple questions.

  1. Allstate: Insurance Calculator Tools

Allstate’s insurance calculator tools address all your major coverage needs, including auto, home, life and retirement. The calculators come with all the information necessary to help you decide which plans will work best for you and your family. Additionally, the thorough platform acts as an all-in-one learning center for the most common questions about various types of coverage.

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It’s not hard to figure out where you can save money on your current coverage policies. Try these seven insurance calculator tools to find the best home, automotive and life insurance coverage to suit your budget for the coming year. Once you’ve done some preliminary research, you can start seriously shopping for home coverage, life insurance and automotive protection.

Know someone who is looking for ways to cut down on expenses in 2016? Share this post!

5 Insurance Apps to Download Today

Forward-thinking insurance companies are leveraging technology to improve customer experience and differentiate themselves from the competition. Here are the top five insurance apps you should download today, to help with tasks ranging from creating a home inventory to improving your driving skills.

  1. Home Gallery App
    Cost:
    Free
    Benefit: Helps you create a home inventory

A home inventory makes filing an insurance claim easier should your things be stolen or damaged. It also gives you an estimate of how much your possessions are worth, which is helpful when you shop for homeowners insurance. Fortunately, the Home Gallery app from Liberty Mutual makes cataloging your possessions a cinch. The app allows you to take photos of your items, note important information such as purchase price and date and share your inventory with family members or your insurer. Best yet, you can use the Home Gallery app whether or not you’re a Liberty Mutual customer.

  1. Driver Feedback App
    Cost:
    Free
    Benefit: Gives you information to become a better driver

State Farm’s Driver Feedback app helps you become aware of driving habits that increase your chance of being involved in an accident, which could raise your auto insurance premium. The app uses your smartphone’s accelerometer and GPS locator to collect data about how you brake, corner and accelerate. Once you arrive at your destination, the app gives you a score for your trip and offers tips about how to improve your driving.

Using the Driver Feedback app, you can also compare data from one trip with another and share the results via email or text. These features can help new drivers form good driving habits and allow parents to monitor their teen’s performance behind the wheel. Plus, using a driving app is one way your teen might reduce her auto insurance premium. You don’t need to be insured with State Farm to use the app, and your driving data isn’t shared with your insurance company.

  1. Text4Baby App
    Cost:
    Free
    Benefit:
    Provides tips to help expectant moms stay healthy during pregnancy

The Text4Baby app provides pregnant women with a wealth of information to help them have a healthy pregnancy and avoid preventable complications. When a mom signs up, she receives a “starter pack” of messages. Then, every week, she receives three text messages about prenatal care, ranging from doctor appointment reminders to information about symptoms that could warrant concern.

Major insurance providers, like Aetna, CIGNA and Blue Cross and Blue Shield, are Text4Baby “outreach partners.” This means the companies encourage expectant moms to use the app to stay healthy, which can reduce the chance of complications that can make pregnancy-related costs skyrocket.

  1. Infinity App
    Cost:
    Free
    Benefit:
    Allows you to create a secure digital inventory

The MetLife Infinity app gives you the power to create a digital inventory of photos, videos and audio files, plus important documents like wills and insurance policies. The app stores as much as five GB of data in the cloud, and it’s password-protected and permanently backed up. You can organize your information in collections and securely share the information with anyone, from a family member to your insurance agent. You can take advantage of the app even if you’re not a MetLife policyholder.

  1. Defend Your Income
    Cost:
    Free
    Benefit: Explains how a disability can affect your life

Defend Your Income is an online game produced by the Council for Disability Awareness. Its goal is to help you understand how a disability may affect your life. Throughout the game you defend yourself from health-related issues like pregnancy complications, cancer, and respiratory disease. After you complete each round, you answer trivia questions and learn miscellaneous facts about the disability.

By the end of the game, you’re more aware of your disability likelihood and have an idea of how much income you could lose if you become disabled. This information is useful when you’re calculating the amount of disability insurance you need.

These apps are transforming the insurance industry by elevating customer service to a new level. Download one or more of them and then share your experience. We’d love to hear your thoughts.

San Andreas — The Real Horror Story

For the past two weeks, the disaster movie “San Andreas” has topped the box office, taking in more than $200 million worldwide. The film stars Dwayne “The Rock” Johnson, who plays a helicopter rescue pilot who, after a series of cataclysmic earthquakes on the San Andreas fault in California, uses his piloting skills to save members of his family. It’s an action-packed plot sure to keep audiences on the edge of their seats.

As insurance professionals who specialize in quantifying catastrophic loss, we can’t help but think of the true disaster that awaits California and other regions in the U.S. when “the big one” actually does occur.

The real horror starts with the fact that 90% of California residents DO NOT maintain earthquake insurance. The “big one” is likely to produce economic losses in either the San Francisco or Los Angeles metropolitan areas in excess of $400 billion. With so little of this potential damage insured, thousands of families will become homeless, and countless businesses will be affected – many permanently. The cost burden for the cleanup, rescue, care and rebuilding will likely be borne by the U.S. taxpayer. The images of the carnage will make the human desperation we saw in both Hurricane Katrina and Superstorm Sandy pale by comparison.

The reasons given for such low take-up of earthquake insurance generally fall into two categories: (1) Earthquake risk is too volatile, too difficult to insure and, as a result, (2) is too expensive for most homeowners.

Is California earthquake risk too volatile to insure?

No.

The earthquake faults in California, including the Hayward, the Calaveras and the San Andreas faults. are the most studied and understood fault systems in the world. The U.S. Geological Survey (USGS) publishes updated frequency and severity likelihood every six years for the entire U.S. This means that estimation of potential earthquake losses, while not fully certain, can be reasonably achieved in the same manner that we can currently estimate potential losses from perils such as tornados and hurricanes. In fact, the catastrophe (CAT) models agree that it’s likely that on a dollar-for-dollar exposure basis, losses from Florida hurricanes that make landfall are more severe and more frequent over time than California earthquakes, yet nearly 100% of Florida homeowners actually maintain windstorm insurance. If hurricane risk in Florida isn’t too volatile for insurers to cover, then earthquake risk in California should follow that same path.

Isnt earthquake coverage expensive?

Again, the answer is a resounding no.

The California Earthquake Authority (CEA), the largest writer of earthquake insurance in the U.S., has a premium calculator that quotes mobile homes, condos, renters and homeowners insurance. For example, a $500,000 single-family home in Orange County, CA, can be insured for about $800 a year, or roughly the same price as a traditional fire insurance policy. To protect a $500,000 home, an $800 investment is hardly considered expensive.

The real question should be: Are California homeowners getting good value? CEA policies carry very high deductibles — typically in the 10% to 15% range — and the price is “expensive” when the high deductibles are considered. As one actuary once explained it to us, “With that kind of deductible, I’ll likely never use the coverage, so like everyone else I’ll cross my fingers and hope the ‘big one’ doesn’t happen in my lifetime.”

It’s this lack of value that’s the single biggest impediment preventing millions of California homeowners from purchasing earthquake insurance. It’s also an area that has much room for improvement.

How can we as an industry raise the value proposition of earthquake coverage? Consider the following:

  1. The industry can make better use of technology, especially the CAT models. California is earthquake country, but it’s also a massive state. This map shows that the high-risk areas mostly follow the San Andreas fault and the branches off that fault. There are many lower-risk areas in California, and the CAT models can be used to distinguish the high risk from the low risk. Low risk exposures should demand lower premiums. Even high-risk exposures can be controlled by using the CAT models to manage aggregates and identify the low-risk exposure within the high-risk pools. We expect that CAT models will help us get back to Insurance 101 by helping the industry to better understand exposure to loss, segment risks, correct pricing, manage aggregates and create profitable pools of exposure.
  2. The industry can bundle earthquake risks with other risks to reduce volatility. Earthquake-only writers (and flood as well) are essentially “all in” on one type of risk, to steal a common poker term. Those writers will fluctuate year to year; there will be years with little or no losses, then years with substantial losses. That volatility affects retained losses and also affects reinsurance prices. Having one source of premium means constantly conducting business on the edge of insolvency. Bundling earthquake risks geographically and with other perils reduces volatility. The Pacific Northwest, Alaska, Hawaii and even areas in the Midwest and the Carolinas are all known to be seismically active. In fact, Oklahoma and Texas are now the new hotbed regions of earthquake activity. Demand in those areas exist, so why not package that risk? Reducing volatility will reduce prices and help stabilize the market. We estimate that in parts of California, volatility is the cause of as much as 50% of the CEA premium.

Hollywood has produced yet another action-packed film. But to add a touch of realism, Hollywood screenwriters should consider making the leading actor, The Rock, a true hero – an “insurance super hero” who sells affordable earthquake insurance.

Death by Meeting? Nope. Here’s How Meetings Can Be a Game Changer

Although there is a backlash against meetings in some quarters—Intel used to order executives to calculate before a meeting how many processors would have to be sold to cover the portion of participants’ salary being spent in the meeting—there is a system of meetings that can produce remarkable results. The system involves regular, planned meetings that leaders have one-on-one with subordinates that support seven important processes:

  • Communications
  • Effective, supportive relationships
  • Targeted management development
  • Solid delegation
  • Strong accountability
  • A high-performance culture
  • Continuous improvement

A disciplined One-on-One Meeting System will not only increase productivity but will help your direct reports become better leader-managers. Your employees will see what great leadership looks and feels like, and the experience will be a game changer.

Unfortunately, leaders in most fast-paced, mid-market companies typically become caught up in the wave of day-to-day work and devote little thought to one of their most significant leadership opportunities: growing performance capacity.  A business keeps growing, but the people don’t.

There are three common adversaries that hold companies back in their quest to stay competitive:

  1. Keep doing the same thing
    “It’s still working, so why should we change?” is something we hear in businesses that do not actively look for ways to improve performance. A surprising number of mid-market companies have that exact mind-set. The problem is generally that leaders don’t know what they don’t know and won’t venture into areas where they have no knowledge. Change has not become an ally.
  2. Superficiality
    This means not digging deeper into understanding people and systems, and their impact on business results. Spending time with direct reports addressing performance opportunities usually only occurs when a problem arises. Even then, there is often little preparatory work.
  3. Inconsistency
    In our humanity, we struggle to keep our good habits going—the bad ones. . . not so much. What is good for us often loses to competing demands that are easier to deal with. (I often cite exercise and diet as examples of difficulty in staying the course.) We often embrace a new process for several months until some crisis throws us off course, then go back to old patterns.

As with just about anything in life, the quality of the outcome of the One-on-One Meetings depends on the quality of the preparation. In this system, the direct report is charged with preparing the agenda and providing it to the boss in advance of the meeting. (You should assist your direct reports; over time, you will all get better at creating agendas that support high-impact meetings.)  We suggest regular consideration of the following kinds of subjects:

  • Budget status
  • Action plan progress – status of key projects
  • Growth and development
  • Issues of concern
  • Developing people. Who are the stars? Who needs coaching?
  • How you are developing your successor?
  • Systems improvement initiatives
  • How you feel about your job and our working relationship – what could be better? Am I giving you enough support?
  • What can I be doing to support your growth and development?

Authors Marcus Buckingham and Curt Coffman reported some jarring information about managers in their book, First, Break All the Rules: What the World's Greatest Managers Do Differently, for which they interviewed more than 80,000 managers in 400 companies:

First, on the down side, managers were usually the reason someone left an organization. It wasn’t compensation or benefits that, as a rule, caused people to leave their companies. It was the kind of manager they worked for. People generally stay in their jobs if they like or get along with their managers. A poor manager will usually cause good people to leave. The big downside is that poor managers allow poor performers to keep them company.

Second, the managers who ultimately became the focus of Gallup’s research were those who excelled at turning each employee’s talent into performance. And performance is usually dependent on three critical factors – talent, knowledge and skill.

Accordingly, we believe that mid-market companies have a significant opportunity to improve performance by developing their managers.

As a CEO, I was often satisfied with good performance because I had not yet gained the knowledge about what would turn good performance into great performance. To achieve the best outcomes, leadership issues need to be addressed, and One-on-One Meetings will help you do that.