How to buy Insurance:
This is a difficult question and not a one-size fits all approach.
But the question “How to buy Insurance?” is an important one. The answer can vary depending on the risks and risk tolerance of the buyer, the product purchased, if an individual or business is asking the question, etc.
For example, there are a variety of direct to consumer, phone or online approaches for personal lines carriers and if you are a small business there are very similar channels to buy insurance. But the longstanding buying habits for personal lines and commercial insurance have traditionally been through a broker or agent.
However, buying insurance may change over the next few years….Usage based insurance, Peer to peer insurance, etc.
These topics are all being addressed and discussed by websites like Insurance Thought Leadership.
In the new age of disruption, new competition is entering the Insurance Sector to “disrupt” the traditional role of an insurance broker.
At Bankrate.com they have addressed the topic under the heading “Will Lemonade be the Uber of Insurance?” Although we belief this is a powerful idea, presents opportunity for some disruption and the insurance industry is in desperate need of technology improvements, we suspect there will still be room for the traditional model as well.
Thoughts:
- There is nothing new under the sun. This peer to peer model isn’t new and is somewhat similar to the group captive model, which is far more established and requires brokers or advisers to source and evaluate risk.
- Technology platforms will need to work with regulators to ensure the appropriate capital behind the risks they insure. The 3 to 1 premium to surplus ratio has been a longstanding guideline for ratings.
- Acquiring scale in this platform is going to require multiple channels, possibly requiring broker channel.
- Automated and self driving vehicles may move the liability associated with auto usage to the product manufacturer and away from the individuals
- Most individuals don’t view insurance as a product to take risks with especially when it comes to self-insurance, more often than not, its a topic they don’t have a strong understanding and it protects their most valuable assets (i.e. home, car, jewelry, health)
