Does Buying Insurance Still Suck?

“I used to sell policies that were 6 pages long and told you what you were covered for. Now I sell policies that are 150 pages long and tell you what you aren’t covered for.”

A seasoned producer told me this early in my career. I didn’t understand the significance of this at the time, until one of my clients filed their first claim. It was a daunting feeling submitting the claim to the carrier, crossing my fingers hoping that it wasn’t denied because of some complex wording in the policy forms. I couldn’t help but feel a bit discouraged. I was a licensed insurance producer after all. I knew the state minimums for auto coverage, I knew what DP3 and HO3 policies were. Why was I feeling so nervous?

The truth is, I was selling a product I had no control over. I sold insurance coverages, but didn’t make coverage determinations. Not even the person who priced the insurance coverage could make coverage determinations. I was entirely at the mercy of a $40B insurance company. The value that I originally brought to the table was in jeopardy.

Now think about how this must feel from a customer’s point of view.

I bought a 150 page book of legal definitions that is “supposed” to adequately protect all of my most important assets. It’s too complicated to read and contains words like “additional insured”, “peril”, “cash value”, and “replacement cost” that no non-insurance person would ever use in a normal sentence. I’m counting on this expensive document to kick in when a traumatic event happens in my life. The person who sold it to me isn’t allowed to tell me if something is covered or not, so I have to wait to hear from someone at the carrier that I’ve never spoken to before.

How can something so important be so poorly produced?

When insurance was first deemed by venture capital as an industry ripe for “disruption”, tech companies jumped to redesign the buying process. According to their theories, agents were the source of all of the problems and inefficiencies in the industry. They told us people dislike insurance because they have to speak with someone to buy it.

They were wrong.

People dislike insurance because they don’t see the value in it.

As a former independent insurance agent, I consider it a massive failure when someone chooses to insure their home for as little premium as possible through an online direct-to-consumer chatbot simply because it only takes 5 minutes. They think that all insurance policies are the same because that’s what the YouTube ad that they clicked on told them. This consumer finds so little value in what they are purchasing that they don’t even think it’s worth their time to speak with someone who’s sole purpose is to help them. Insurtechs are devaluing their own product.

This is bad for the insurance industry.

The process of purchasing an insurance policy should be enlightening, not speedy. Claims should be handled with empathy, not automation. The insurance industry was never “broken” because of insurance agents. It doesn’t need to be, and is too large to be, “disrupted”. We need to take what has historically worked, and make it better. We should be looking for ways to make an insurance policy more valuable in the eyes of the consumer, not less.

Until that happens, there will always be people who think buying insurance sucks.