Sunday, January 01, 2012

 

Are Insurance Carriers adopting the worst practices of Banks?

We all know what happened to the banking sector and its cataclysmic collapse. Some people think banking collapsed do to its incestuous greed and irresponsibility in making horrific underwriting decisions. While these are contributing factors, I believe that the issue at hand is in putting profits ahead of people...



Its now 2012, the year of the empowered consumer. We can no longer expect consumers to exhibit brand loyalty when it has become apparent that they are no longer respected as individuals. Marketers everyone are attempting to classify, categorize and taxonomize consumers into nice little buckets while ignoring what makes them so valuable.

Empowered customers will figure out that insurers determined sometime ago that it was cheaper to use price and sales to win/retain their business than it was to earn their custom and loyalty through value and service. It is the insurance industry version of the same flawed "high leverage/high growth model" strategy that the banks blew-up!

This inward-looking and self-serving approach focused upon improving margins for the operator at the expense of the customer, rather than on the type of "creative destruction" to improve products/service and has ultimately left the industry reputationally damaged and untrusted.

As we continue down this destructive path, I humbly predict that the rise of technologies ranging from business intelligence to channel transparency will further erode the value proposition of insurance to consumers. With passion, I humbly predict that this will be a year where the increase in loss ratios will outrun the ability to increase prices. Anyone care to argue differently, I welcome their insight...




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