I just went through a very rewarding experience of shopping for insurance. Of course, I went through InsureMe, and I received great responses from several agents, some emailed and some called. I discovered I’m the person who wants to talk... to an agent. Probably no surprise to those who know me.

So I thought it would be a good time to review how people shop for insurance. Or at lease review the statistics available. But before I dive into the stats, let me contrast the stats with my very individual experience.

I am the type of person who avoids insurance, at least shopping for it, and for me, it felt just great to have someone pursuing me to rethink my insurance coverage. I welcomed the phone call, because it meant someone was going to help me save money. A friendly approach was helpful too. Casual and no pressure. It has taken many call backs but I’m actually getting close to purchasing new insurance coverage.

Now for the stats: 15% of the time spent on the internet is for financial information and 12% is on shopping. In 2007, 32 Million people requested auto quotes via the internet. And the stats also show that people don’t go directly to a website, they use the search engines. In a Yahoo survey, 75% of the respondents turned to search engines because they didn’t remember or try to remember a web address. And 59% of those discovered new brands for what they were shopping for. Which means, succinctly, Google is giving your competition great visibility. By the way, if you search on auto insurance, you will get about 33 million ‘hits’ on Google. That’s a lot of competition.

But the stats still show that we might research insurance online but we typically buy directly from wonderful, supportive, sympathetic and patient agents like yourself. According to comScore – 2008, over 80% of the people buying auto insurance finished the transaction directly with a live agent. And the major reason was because, like me, “I like having a real person who I can visit with or call.” Just like the ones helping me with my own purchase. But they’ll l start on-line. 50% of those people buying insurance from an agent used the web for initial research. In auto insurance it is up to a whopping 86%.

Posted by Lori Reed at 05:26 PM | Permalink | Comments (1)
 

Caller ID. Do not call lists. A cynical, over-marketed, and increasingly web-centric populace.*

Is the era of cold calling finally over? (For the record, by cold calling I mean calling someone on the phone. Regions of the country define it as going door to door.)

If so, what replaces it? Email? Flyers? Free pumpkins? Messages written in sidewalk chalk? Internet leads?

Or can the proper strategery generate positive results?

Vote below. And then post any thoughts. Go!

* A 2007 Jupiter Research study revealed that 72 percent of auto insurance buyers used the internet to help them purchase a policy.

Posted by Jeb Foster at 09:44 AM | Permalink | Comments (0)
 

I don’t know about you, but I have a soft spot for policy wonkery.

So I enjoyed the recent series in the Insurance Journal about credit-based insurance scoring. Written by Lawrence S. Powell, Ph.D., who is also the author of the blog RiskProf, the collection of five articles amounts to a painstaking defense of insurers’ use of credit history as an underwriting tool, a controversial practice to say the least.

If you don’t have the time, patience and/or taste for wonkish articles, this paragraph will give you the gist:

Insurance scoring is an example of a beneficial tool used in ratemaking that is often misunderstood. Insurance scores are relatively powerful and accurate predictors of losses, even when controlling for other factors known to be correlated with losses. When insurers use insurance scores to improve the accuracy of predicted losses, it benefits individuals and society. It increases the equity or fairness in insurance pricing outcomes because, on average, premiums are closely related to consumers' risk of loss. Insurance scoring also adds value to insurance transactions. It reduces the overall cost of providing insurance because insurance scores are accurate and inexpensive rating variables.

Read the series

Posted by Jeb Foster at 02:34 PM | Permalink | Comments (0)
 

You know the health insurance debate is changing when insurance company executives go on record advocating universal mandates.

That is exactly what Bruce Bodaken, chief executive of Blue Shield of California, told the LA Times recently. In an article published today, the LA Times explains why a mandate has the support of the likes of Bodaken:

The rationale of universal coverage, the norm in other industrialized countries, is that costs are manageable when everyone is covered because the risk pool includes the young and healthy to offset the older and sick.

In the current system, insurers, who look to cut costs and please their investors (quite reasonably), ‘cherry pick’ the healthiest applicants and leave the unhealthy with either crushingly expensive coverage or none at all. What’s worse, insurers end up spending incredible amounts of time and money—time and money that could be spent on paying for care—on looking for reasons to rescind coverage from their own customers. Some companies even issue bonuses to employees who bounces the greatest number off the rolls.

The social toll of this system is well documented and doesn’t need to be restated here; heartbreaking stories abound.

Another problem with this setup is that the insured end up suffering too: when an uninsured person goes to the ER—the most expensive way to visit the hospital—the cost is passed on to the insured in the form of high overall health care costs and higher taxes.

A universal mandate would turn that de facto subsidy into an actual one—wherein the healthy and wealthy, with the help of the federal government, subsidize the sick and poor. For the currently healthy and wealthy, that may sound like a bad deal, but it isn’t when you consider that if everyone had access to routine and preventative care, there would eventually be fewer and fewer expensive trips to the emergency room, and thus fewer unpaid medical bills to pass on.

Executives like Bodaken now see the importance of mandates, and it’s easy to see why. With popular calls for reform reaching a crescendo—and with people of all ideological stripes considering greater government intervention—insurers are scrambling to be part of the solution, lest they find themselves, um, declined.

Posted by Jeb Foster at 01:21 PM | Permalink | Comments (2)
 

The Agent Blog is about to get a facelift!

Keep your dial tuned to www.insuremeblog.com/agent to see the official unveiling.

Have a happy weekend, folks!

Posted by Jeb Foster at 01:43 PM | Permalink | Comments (0)
 

While the ubiquitous coffee chain has proven to be as vulnerable as other businesses to the economic downturn, there is still a lot we can learn about the company that started out small yet went on to inspire this Onion headline: New Starbucks Opens In Rest Room Of Existing Starbucks.

Starbucks grew to its behemoth size for a lot reasons, but one reason that stands above the rest is this: they offered things that were typically available only to the wealthy—fancy coffee, good lighting, attentive service—and gave them to everyone. They gave Joe Sixpack the Plummer an espresso shot of luxury (literally and figuratively).

A couple weeks ago, I blogged about the ‘nice premium,’ the extra amount people are willing to pay for excellent service. Turns out, people are willing to pay a lot. The opportunity for you, since offering excellent service costs you next to nothing, is to offer it for free—and to everyone. That’s essentially what Starbucks does: they treat everyone who walks in with an attentiveness that’s usually only reserved for the guy or gal in the corner office.

And that’s one of the reasons people love Starbucks. So I’ll close with a rhetorical question:

Were you as friendly to your last lead as your Starbucks barista was to you this morning?

Posted by Jeb Foster at 10:14 AM | Permalink | Comments (0)
 

With this quiz, Seth Godin defines basic, 21st century office competence:

* Can you capture something you see on your screen and paste it into Word or PowerPoint?
* Do you have a blog?
* Can you open a link you get in an email message?
* Do you read more than five blogs a day?
* Do you have a signature in your outbound email?
* Do you have an RSS reader?
* Can you generate a PDF document from a Word file you're working on?
* Do you know how to build and share a simple spreadsheet using Google Docs?
* Do have a shortcut for sending mail to the six co-workers you usually write to?
* Are you able to find what you're looking for on Google most of the time?
* Do you know how to download a file from the internet?
* Do you back up your work?
* Do you keep track of contacts using a digital tool?
* Do you use anti-virus software?
* Do you fall for internet hoaxes and forward stuff to friends and then regret it?
* Have you ever bought something from a piece of spam?

How did you do?

If you did poorly, don't worry. Just find someone to teach you!

Posted by Jeb Foster at 02:50 PM | Permalink | Comments (3)
 

Many (if not most) members of Generation Y …

• Have a blog and/or Facebook or MySpace page
• Send text messages to their friends (and parents)
• Send instant messages to their friends
• Watch videos on YouTube
• Download music files (both legally and illegally)
• Do not have a land line
• Take photos with their phones and post them on sites like Flickr , Picasa and (of course) Facebook
• Communicate with their parents via email

Hat tip: Brazen Careerist for the Gen Y test

Posted by Jeb Foster at 10:20 AM | Permalink | Comments (0)
 

Do government bailouts create a moral hazard? Financial Times columnist Tim Harford says not really, and he adds that we shouldn’t get too bent out of shape when the federal government spends our dollars to save corporate giants (and their CEOs) like AIG and Bear Sterns.

First off, Harford says our current definition of the term moral hazard is a little strained. Harford reminds us that term originates in the, you guessed it, insurance industry and refers to the prospect that insurance will lead people to take undue risks and/or submit fraudulent claims:

Moral hazard can sometimes take extreme forms. According to the Florida newspaper the St Petersburg Times, in the late 1950s and early 1960s, more than two-thirds of insurance claims for the loss of a limb originated in the Florida Panhandle. At the epicentre, "Nub City" - the tiny town of Vernon, Florida - almost 10 per cent of the adult population had lost a limb. One man was said to be insured by dozens of companies when he lost his foot; fortunately he had been carrying a tourniquet at the time of the accident. He pocketed a million dollars. Another man shot his foot off - "while aiming at a squirrel" - just 12 hours after buying insurance. Now that's careless - and that's moral hazard in spades.

Harford continues: “If AIG had shot off its own metaphorical foot to claim a government bailout, the argument against the bailout would be compelling. But it didn't, and it isn't.”

In other words, AIG didn’t intentionally plot a course of destruction with the knowledge that there would be a soft, government-funding landing. Yes, they showed poor judgment, but they were, at the very least, truly hoping everything would turn out in the end.

Understandably, there is a lot of anger directed toward Wall Street these days—the collective pulse of the nation is now in the triple digits thanks to reckless (and perhaps predatory, if you ignore Joe Six-Pack's lies on his mortgage application) lending practices. But Harford admonishes us that we shouldn’t get overly vindictive toward Wall Street—for our own sake.

The government will not help you replace your possessions if you smoke in bed and your house burns down, but government-funded fire engines will put out the blaze, moral hazard or not. That is partly because fire can spread, and your neighbors should not suffer for your carelessness. The same motive lies behind the current spate of rescues. It is also because a civilized society tries to save people from accidentally burning themselves to death. If the consequence is a little more carelessness, so be it.

Yes, AIG was careless, but if we insist on letting it burn, we will end up fighting the same flames when they extend to Main Street. Read the entire article.

Posted by Jeb Foster at 04:17 PM | Permalink | Comments (1)
 

My questions for you:

Q. Do you think the bailout plan, which just cleared the House, will have any positive effect on the economy? The credit crunch? The mortgage crisis? Are there any other plans that you think would or would have worked better? (Here is former Treasury Secretary Paul O'Neill's plan, here's billionaire George Soros', and here is Edmund Phelps' plan (2006 Nobel Prize winner.)

Q. Who or what is to blame for our current economic woes? Do you agree with Gov. Palin, who in last night's debate blamed "predatory lenders" for causing the crisis?

Q. What do you make of the rather bizarre Microsoft ads featuring Jerry Seinfeld? Brilliant or bonkers?

Leave a comment with your impressions below.

Posted by Jeb Foster at 02:06 PM | Permalink | Comments (1)
 

Pay as you go insurance—coverage that reflects driving habits and usage, much like how a cell phone plan works—is starting gain popularity on this side of the pond (it has been around in the UK for a while). Progressive now has a pay as you drive plan, called MyRate, that has drivers installing a gizmo on their car that tracks their mileage and driving behavior. Information is collected every six months and used to recalculate the driver’s premium.

Environmentalists love the idea (because it will likely spur a reduction in miles driven). California’s insurance commissioner is on record supporting the trend. And insurers like pay as you go because it means they can more accurately assess a driver’s claims risk.

It remains to be seen whether regular consumers will be willing to part with quite a bit of privacy in order to enjoy a lower premium. (With gas prices so high, my hunch is that they’ll take the savings.) Although, according to a survey on this site, the reaction seems pretty mixed.

But what about you, Joe Agent? What do you think of this trend? Will lower premiums necessarily result in smaller commissions? Leave any impressions in the comments below.

Posted by Jeb Foster at 01:52 PM | Permalink | Comments (0)