Price Ads Undercut True Value of All Insurance
Insurance buyers over the years have shifted their thinking from the value proposition to that of just a simple cost consideration. Not everyone thinks this way, of course, but it is a trend. Buyers of insurance are forgetting that insurance is a tool, an asset. Both in your business and personal lives, you need to view insurance as an asset. Unfortunately, for so many of us, insurance only shows up as a cost on the P&L with no offsetting tangible income improvement on the other side.
The ad campaign, ’15 Minutes can/will save you 15% on car insurance’ and other such promotional ad campaigns have, I believe, had an effect on the way people think and shop for insurance. In the old days, people would call and ask about how an insurance product worked, what it covered, what it didn’t cover, whether the insurance company was stable? Now, more and more people just want to know the price.
The Price – the price of what? What are you getting? What are you not getting? When there is a claim how does the insurance company respond? When there is a claim, what do you need to do?
Have you noticed the ‘Mayhem’ TV ads on, which are a direct response to the ’15 Minute saves….” ads, the idea being that you may not be covered.
And one or two of the other large carriers’ advertisements refer to having an agent available, the idea in this casse being that you might appreciate having an agent on hand to assist you.
OK, so buying insurance is a Pain — no question about it. I have to do it, too, just like you, and I personally hate paying for insurance, something I never use or see or get to play with like a new set of golf clubs. Insurance is just something that one has to have, and as long as you have to have it, you might as well be certain that you have a product that is going do what you need it to do in that time of need.
I’ll give you a specific example When someone wants to rent an RV and they are insured by that ’15 minute saves…’ company, they all of a sudden discover that their insurance does not provide coverage for the RV rental situation. They are required to pay additional dollars to secure coverage. So, at the end of the day, how much did this customer save by using what the ‘Mayhem’ ad calls “cut-rate insurance?”
This example goes for all insurance products — life, health, auto and property casualty. There is no Free Lunch in the insurance industry. There is no insurance company out there that has thought of a way to provide coverage and not pay the covered claims. Companies have to charge premiums to pay those claims. Claims are claims. As one of our RV industry leaders once said, “This year’s claims are next year’s premiums.” In its simplest form, premiums are driven by claims.
So think about your insurance; realize that insurance is an asset to your business and your personal life, and treat it like an asset on the balance sheet. For all practical purposes it is as such. Realize that when you have claims they are counted against you. Claims are like liabilities that are depleting your assets. Take care of your insurance so that it will be there to take care of you.
Put some thought into all the insurance products that you purchase; like other assets in your company, you are going to have to live with them. Think about how you want that product to perform and whether that performance would be a proper reflection of how you believe your insurance should respond.
Price is important – of course. Price was important when you first bought your car or truck or any number of things. But, it was probably not the determining factor in most purchases. The fact of the matter is that you wanted the thing to work for you! So, maybe look at insurance the same way; all insurance should work for you.
Regardless of what insurance product you are going to buy, think it through. Insurance can be very complicated and it is easy to make a mistake. Don’t make a hasty decision and buy a policy for which the tag line might be: “15 Minutes Can Cost you Big Time Troubles.”