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Why Insurance Companies Don’t Understand People

By August 4, 2017February 19th, 2021Asphalt & Concrete, Bonds, Business Insurance, Contractors

I’m skeptical about insurance companies saying how great their insurance products are and how their products are exactly what people need. One time I had an underwriter from a major insurance company tell me about their new “Cyber” product that covered organizations for Identity Theft of client information.  She talked about how nefarious hackers on the internet are just seeking to breakdown companies’ network security.  I noticed that she kept pressing the point about hacking over the internet.

I asked her a question. What happens if a business owner forgets to shred paper documents with people’s names and social security numbers and that paperwork is stolen from the dumpster?  Do you cover that?

She paused for a moment and said no, then proceeded to go back to her “all digital” attack scenarios.

I didn’t dismiss what she was saying in its entirety. It’s well documented that cyber-attacks do happen.  But businesses and non-profit organizations still use paper to conduct business and people make mistakes in not disposing of that paper properly.  You just don’t hear about that in the news.

I told the underwriter in the nicest way possible that I couldn’t sell this product. It’s not addressing the complete needs of a private business or a non-profit organization who are not 100% digital. 

I had another underwriter from a different insurance company try to convince me that her company’s product provided three key coverages that protect commercial landlords. She spoke with absolute conviction in saying “None of your customers have this coverage!”  I countered in saying that two of the three coverages she was talking about are already included in a general liability policy.  You can imagine the look on my face when she told me I was wrong.  I was about to pull out a copy of an insurance policy and show her how coverage works when an associate of hers nervously jumped in and said “Hey let’s move on to other matters we need to discuss.”

By the way, when that underwriter referred to our clients as customers, I almost blurted out “McDonald’s has customers! We have clients.”  But then she works for an insurance company that is how they look at people.

Insurance companies spend millions of dollars advertising their insurance products and services. They sponsor sporting events, have mascots you can take a picture with, and even provide promotional items with the insurance company’s logo.   That is all well and good.  There is nothing inherently wrong or evil about any of that.

Insurance company advertisements are designed to persuade a consumer or even an insurance agent to buy or sell their product. But they take a one-size-fits-all approach.  And for the years that I have been in this industry I can say with certainty that everybody is different.

Flood Insurance makes sense for someone who lives at the Jersey shore near the water but probably doesn’t make sense for someone on the 18th floor of a high-rise apartment building in Jersey City.  In spite of this, you will see advertisements saying: “Everyone is in a flood zone.  You need to buy flood insurance!” 

The most horrendous insurance carrier advertisement slogan is the one that promises to save you 15% on your car insurance. How do they know what you drive, how you drive, and your driving experience?  Those are critical factors that come into play in determining the cost of an auto insurance policy.  So how can they declare they can save you 15% when they don’t even know you?

But even if they have that information, a way to save you money is to scale back the coverage. We have a customer who came to us after she found out the auto policy she bought through an insurance company’s website had scaled back the amount of coverage she had for medical bills.  She said she used their website “pricing tool” where she set a price and they gave her a quote based on that price.

After buying the policy she had an auto accident which resulted in $75,000 in medical bills. It was then she found out she had $50,000 of coverage.  No one from this insurance company explained to her the coverages she was buying.

Why am I bringing this up? Buying an insurance policy is not like buying a pizza.  It’s protection from a financial disaster that you could not afford on your own.  Your needs are different from the person living next door to you.  Insurance carriers don’t have the time or the resources to help you figure out what you need.  They just want you to buy from them the generic policy they advertise to everyone.  But to them you are just a policy number.

But there is someone who does have the time and resources to help you figure out what you need. That is an independent insurance agent like Rue Insurance.

It doesn’t make a difference if you are an individual, a business owner, or a non-profit organization. You need a professional who is going to figure out what you need to protect that which is most important to you.

If you are sick you want the best doctor to help you. If you have to deal with the IRS you want a really good accountant.  If you have legal needs you want a fantastic lawyer who is going to fight for you.  When it comes to financial protection for your hard earned money and possessions, don’t you want someone to talk to where you are not a policy number, not a customer, but a client?

When Bill Rue Jr., our President, said in a commercial we created: “So first we get to know you, carefully review your financial needs, then customize a solution other insurance companies can’t begin to provide.” He wasn’t kidding.  We live this day in and day out.  Check out the video below.

Let me leave you with a quote from a new client who we started working with this year. I think it really sums up what we do to help our clients. 

“I must admit before I met Zach Granata I had lost all faith in insurance agents.  We had been with the same insurance agent since the inception of our company.  When we had overwhelming problems with Liberty Mutual, no one from the agency gave us the attention we needed to solve our problems.  In fact, the agent I had told me to call Liberty Mutual myself every time I had a question.

Zach handled everything.  He saved our company!  We will never be able to show our full appreciation to Zach for everything he has done.  Zach and Rue now have a lifelong client.”

Mark & Michelle Schafer from M&M’s Just Septics LLC.

This quote about one of our risk management consultants is not uncommon. I hear comments like this every month.  You won’t hear people raving about how the Artificial Intelligence Chat Bot from the insurance carrier that is named after a piece of fruit helped them out.

I’ve been working at Rue Insurance for over 12 years and I have to say I work with a bunch of rock stars. You should meet some of them.  Reach out to me below and tell me if you want to meet one.  I’ll hook you up.



Scott Harrigan

About Scott Harrigan

Scott started his career in insurance in 1988 and joined Rue Insurance in 2004 as a Marketing Specialist focusing on creating effective risk financing and risk transfer programs for companies and non-profit organizations. In addition to this he is a member of the Rue Insurance educational team that provides ongoing professional development in critical insurance concepts and programs to Rue employees. About Scott | More Posts by Scott