Insurance is not a commodity, insurance is not a commodity. If we keep saying that, it is true. Among the latest in a deluge of GEICO ads is a series entitled “Did You Know ” in which one character absent mindedly says “hmmm, 15 minutes can save you 15 percent or more on car insurance.” A second character responds “yeah, everybody knows that.”
The ads are funny but the point is that if everybody does know that all you need to save money on insurance is 15 minutes, then car insurance is a commodity in the eyes of the customer. And why 15 percent? Doesn’t that sound suspiciously like an insurance agent’s commission? The ads essentially say skip the agent, do it yourself and save the commission.
So while GEICO and Flo are in the customer eyes and ears multiple times every day, on TV and print, what is the rest of the industry doing to counter that impression? In short, not that much because a billion dollar marketing budget does make a difference. And while GEICO asks for just 15 minutes, most insurers talk about the complexities of insurance, of deductibles, exclusions, limitations and the value of a face to face consultation/grilling/meeting with an insurance agent.
To combat the commodity impression, insurance carriers and agents must first accept the current reality. For many customers, insurance is a “necessary evil” and insurance companies are “all the same.” There is no relationship as claimed by many insurers. According to a recent study by Ernst and Young, 44 percent of insurance customers reported having no interaction with their insurer in the last 18 months. Part of this comes from the fact that meeting with an agent is simply not valued, convenient or an appropriate use of time for many customers. Customers trust friends, family members, ex-spouses, complete strangers, cartoons, and maybe even a TV lizard before they trust an insurance company.
It is time for carriers and agents to rethink what value they could offer beyond the policy. GEICO has staked its claim for the price and convenience mantle, and not too many insurers can or should battle on that ground. But are low prices what the customer wants? Some for sure, but not most. But do customers really want or need a relationship with an insurer? They want a reasonable price, operational efficiency, ongoing guidance and excellent customer service. That is not so much a relationship as doing the job.
An insurance company is most relevant in a personal calamity, yet few customers want to file a claim. They would prefer to safeguard their possessions, belongings and loved ones. Are insurers providing a service when they accept money to protect a home, but never offers practical advice on how to actually do that? Ironically, claim avoidance is where the insurer and customer motivations are totally aligned.
Insurers must communicate with customers on the topics keeping them awake at night, and by and large this is not about policy updates. Many customers have become fanatical researchers, self-educating on all topics including insurance. The industry model of having agents sitting in their office, waiting for questions, is laudable but seems antiquated. Insurers must go to the customer and invariably that is not a physical meeting but on Facebook, Twitter, LinkedIn, Google +, Instagram, Pinterest, and Snapchat. It also means email, text messaging, Skype, online chat and third-party blogs. This is a huge undertaking requiring new content written strictly to help the customer protect their cherished possessions, not to sell a policy.
If GEICO’s billion dollars a year does convince customers that 15 minutes really does save them 15 percent, then the battle is lost. The customers will consider the relationship’ to be no more than an infrequent transaction. Insurers must provide value throughout the period of coverage, and even then it is not a relationship, it is what a good service provider does for its customer.
This blog entry has been reprinted with permission.
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