Consumer Advocacy: What Do Clients Really Want?

I’m passionate about selling clients the coverage and protection they need, or at least helping them make good decisions about what they want to self-insure. I have significant concerns that consumers are now, and soon will be getting even less advice than ever. The tricks — and these are tricks — carriers and distributors use that result in insureds buying less coverage are too successful for them to stop using. People who care can at least take this opportunity to create a niche that rewards their efforts and protects those clients who will work with them, collaboratively, to build strong insurance programs.

The tricks can be generalized in these categories: Price, DIY and Complexity.

Price

“You can save $X” or “The average new buyer saves $X”

1. The former does not make any claims the savings refer to apples to apples coverage. For example, in one case the client was told, “You have the same coverage as before, 25/50/25 adds up to $100,000 — just what you have now, but you’ll pay less.” The insured had $100,000 CSL. The two are not even close to the same, so the 25/50/25 quote should save the insured a lot of money.

Insureds see these ads and they automatically presume the coverages are the same and usually don’t know enough to easily identify when the coverages are not materially the same. I wish a requirement existed stipulating such ads be required to include a complete apples-to-apples comparison disclaimer.

2. The second claim is a case of serious statistical misapplication. It only applies to the consumers who buy from that carrier. 10,000 people could get higher quotes while 10 obtained materially lower quotes and the statement, “The average person switching saved $X” would be categorically correct, and rather pointless. By leaving out the 9,990 people who did not switch from the equation, reality is distorted.

Currently the medical publishing and testing industry is struggling with drug tests that eliminate many of the negative results so that people have less awareness of the negative results. Omission, as in E&O, is just a different form of an error but omissions are often permitted in advertising, whereas purposeful errors are not.

Do It Yourself Insurance

Do it yourself (DIY) projects are popular in many areas, particularly hobbies, but should not be attempted when dealing with serious life affecting issues like insurance. In some ways, DIY insurance is as ridiculous as DIY surgery.

From a sales perspective, it is a successful strategy because it empowers people. Being empowered is great if one knows what one is doing. Being ignorant and empowered has only one possible result – the empowered party losing someway and somehow.

To be fair, many agents do not give better advice even though they have a license. So, a consumer faced with a lower rate on a DIY program versus a higher rate with an agent that is incompetent, choose the DIY rate. One does lose the ability to sue for bad advice because you can’t sue yourself for choosing the wrong coverages.

The DIY insurance program is a unique version of an old con game that has an interesting result. Feeling empowered, when the bet goes wrong, people don’t usually accept full blame. In fact, feeling empowered, even if their decisions are wrong, they will often buy again from the same con man failing to realize they are the shill.

One requirement for these ploys to work is the insured has to think that all insurance policies are the same. To be a consumer advocate, one has to help people understand the huge differences in coverage options and even forms from one carrier to another.

Complexity

Add to the complexity and few consumers, even CFO’s of sizeable companies, have the time and/or ability or even access to the various forms to understand what their options are and how they will benefit from this endorsement or that endorsement. The pressure to make decisions on complex subjects increases the opportunity for con men. When you add peoples’ desire for speed, saving money, and the DIY aspects into the mix, these carriers/distributors will likely make a lot of money. I hope this article does not inspire anyone to follow this track. I suppose the old adage of giving customers what they want, even if what they want is not what they’ll actually get makes some sense.

The real key to becoming a successful client advocate is to ask the client what they truly want.

Ask if they really want a huge DIY project or the wrong coverages for a lesser price. Or do they want solid protection for their assets and protection if sued in a litigious happy society? Consumers really need advocates, and agents who care can be the best advocates.