Can the Insurance Industry Turn it Around?
You'll have to excuse my excessive brain function today, but a thought occurred to me earlier after reading about an Iowa insurance agent who installed a video camera in the ladies room (my home state gets all the exciting headlines, I'm telling you).
My thought was this: 
With all the emphasis insurers put on risk models and charging consumers more money based on that risk, shouldn't consumers have something to gauge a company or agent's risk of committing fraud or some other awful offense? Because the insurance industry doesn't exactly have the best reputation out there, thanks to crooked agents, seedy insurance commissioners and weirdos with video cameras. And if you think about it, consumers are taking a risk by trusting an insurer to conduct business truthfully and ethically.
Now I'm sure you're going to come at me with one of two arguments:
- Consumers can protect themselves from crooked business people by doing their homework through AM Best, the Better Business Bureau and the like.
- Consumers are free to buy insurance from whichever carrier they choose, allowing them to avoid the bad eggs.
For those of you making a case with point number one, I would say that you're spot on. Unfortunately, insurance education currently leaves something to be desired and steps need to be taken to remedy this—which would help repair the consumer-insurer relationship.
My concern however, is with point number two. Because while consumers can take steps to avoid the bad eggs, it begs the question: what if they're all bad eggs?
I hate to pose glass half-empty questions, but if the insurance industry takes (or continues to take) a dive, consumers will be stuck between a rock and a hard place: they need insurance but don't want to deal with shady professionals. It's a troubling thought. 2005 is a great example. Insurers got a bad rap from the local to the federal level. Not exactly comforting for consumers.
Now, I'm not trying to paint a dark, evil picture of the insurance industry with these types of questions. Rather, I'm trying to open up some discussion about what steps the insurance industry can take to get rid of the rain cloud shrouding the business. Because honestly, a lot consumers look at insurance companies and agents with the same distrust as a used car salesman. Yep. Ouch is right.
I think FEMA is setting a good example, speaking out about past mistakes and plans to rectify their disaster response in the future. And while I think admitting mistakes made and preventing negative behaviors in the future is key to gaining consumer trust, I wonder if there's something more the insurance industry can do to repair the disconnect. Conduct more extensive background checks on employees? Place more emphasis on ethical business practices? Offer (or require) more ethical business courses?
I'm not totally sure what the solution is, but I do know that the good eggs need to keep the bad eggs from spoiling the whole basket. Otherwise everyone's going to be up a creek. And a bunch of eggs bobbing around in the water just doesn't seem right.
Comments
Great post Megan.
I think you are spot on in regards to the insurance industry needing to work on their public image.
Unfortunately, it might be up to individual agents to work to improve industry perception. I mean, agents shouldn’t have to worry about this, you have plenty to worry about already, but it seems that insurance companies don’t care as much as they should about public perception.
As agents, you are on the front line in this perception battle, and the "good guy" insurance agents should be furious about all of the bad things happening in their industry. But as far as I can tell, agents are more apathetic than anything.
The truth of the matter is that insurance companies do great things for people every day – but no one hears about that – they just hear about the bad things. If the insurance juggernaut that is your employer is unable to make your industry look good, you still might be able to.
Use the media, use the internet, find like-minded pissed-off insurance agents and form an organization bent on cleaning up the industry. I guess my point is, do something. As an agent, you have more power than you think.
Posted by: James Omdahl | April 20, 2006 04:42 PM
James has a good point.
After my last agent seriously screwed up my policy (and consequently got fired), I swore to high heaven I was never going to do business with X Insurance Company again. Low and behold my new agent made up for it ten-fold and now I'm quite happy.
Get a Cool Kids Club together and do your thang, insurance people. Do your thang.
Posted by: Megan Mahan | April 21, 2006 11:59 PM