Archive for February, 2014

Fine print redI often hear senior executives for leading insurance carriers lament the common public perception that insurance products are a “commodity”, to be differentiated only by price.  I share the concern about this dangerous mis-perception, and work hard to help others realize the protection provided by policies as common as homeowners and automobile insurance can vary in many important ways.

Meanwhile, I believe the insurance industry contributes greatly to this problem, and often ask carrier executives why we in the industry — both carriers and brokers — are not doing more to fix it. Many in my industry are not pleased with this view, and often bristle at the question.

How does the industry contribute to the perception that insurance is a commodity?  Consider the commodity oriented messages behind glib advertising campaigns imploring consumers to invest just 15 minutes to save 15%, or to “name your own price”. What message is to be received as policies renew each year from those insurance carriers that send only the few declarations pages of the policy and not the entire policy?  Armed with the scant information provided by a few declarations pages, consumers focus on what they can see —-  the limits of coverage and the premium.  The implication: if the actual policy language detailing the risks that are and are not covered was important we would have sent it. Is it any wonder why consumers perceive cost is the only differentiator when buying insurance?     

Carriers can help consumers better understand the protection they provide by revising the contract language used in their policies to be more easily understood, and sending the entire policy each year upon renewal. Agents and brokers can also be of greater assistance, as too many limit their client conversations to review only coverage limits and associated premiums. While coverage limits and cost are important, few agents expand their conversations to also explain how one carrier’s coverage may provide protection that is different from the next carrier.

Consumers who REALLY wish to understand the protection provided by their policy should ask their insurance provider to document the risks that are NOT covered by their policies, as well as the risks for which coverage is significantly limited. “What are the risks that are excluded by this policy?”  Expect many providers to be stumped by this basic but essential question.

If you or your clients are interested in learning what is NOT covered by your policy, call me to examine the “Fine Print Protection Audit” report I make available for my clients.

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