Half of Americans say they don’t own enough insurance – why that could mean trouble for the producer

Half of Americans say they don’t own enough insurance – why that could mean trouble for the producer | Insurance Business America

Half of Americans say they don’t own enough insurance – why that could mean trouble for the producer
PolicyGenius, a Brooklyn-based firm that is seeking to “disrupt” the insurance industry, announced this week that it has raised $15 million to expand its price comparison insurance brokerage service. The unique selling point of the service is one that many in the traditional agent/broker channel have heard before – fewer and fewer people want to deal with a live agent, and the future is in comparable policies that can be purchased online.

Yet it is older data from the company, which was founded in 2014 by a former McKinsey consultant, that may prove more worrying to producers: about half of Americans aren’t comfortable with the level of insurance they own.

Citing negative experiences with the industry and lack of concern over the role of insurance in their financial situation, 50% of survey respondents told PolicyGenius they don’t think they have the right level of insurance coverage. Another 7% said they had “no idea” if they did.

Jennifer Fitzgerald, co-founder and CEO of PolicyGenius, posited that most Americans aren’t as concerned with insurance as they are with other financial obligations. For them, “insurance is largely out of sight and out of mind.”

“For most respondents, insurance was the lowest-ranked financial priority,” Fitzgerald said, “behind saving for retirement, paying down debt and sticking to a budget.”

Perhaps more concerning for the insurance industry is the finding that under-insurance is strongly associated with a “recent negative insurance experience.” Of the 50% who agreed that “I probably have less insurance than I need,” 48% reported their last insurance experience was negative.

For insurance producers, that statistic is a mixed bag. On one hand, 59% of survey respondents said they take a DIY, online approach to insurance research, suggesting negative experiences are mostly connected with online insurance shopping.

However, only 27% reported turning to an insurance producer in the first place, suggesting a serious lack of market penetration that could be filled by more adept online solutions—something that may edge producers out of the equation.

“Brokers have been a transactional medium and haven’t really been leveraging the things that add value to their client base,” suggested Jenna Richardson, director of North American Insurance Services for Xchanging. “That I would say from a big picture standpoint is because the value of that placing process is changing. The entire ecosystem is shifting toward technology and brokers need to be providing more value in the way of analytics and value-added services, beyond just the placement of the business.”

If brokers fail to adapt, Richardson says, “I could see an industry 20 years from now where the broker role doesn’t exist.”

Somewhat ironically, producers may be able to make the most headway with those most likely to turn to digital solutions to solve their insurance woes. According to the PolicyGenius survey, 25- to 34-year-olds are the least confident in their insurance decisions, with 54% reporting either too much or not enough insurance.