Is Insurance A Commodity?
Yesterday, we highlighted a recent article by Lisa Smith for the Canadian Underwriter magazine looking at online shopping for insurance. In a follow-up piece, Smith suggested online packages might make selling policies easier with point-click-buy experiences but the process risks mismatching client needs and solutions.
“Wrong policies, limits, or deductible options can leave clients vulnerable if they suffer a loss or an injury,” she points out. “Decisions to purchase online are usually fueled by saving money and time. However, the move to direct distribution and online sales lose the concepts of risk management and risk transfer in financial planning.”
Even if you consider the idea of buying insurance online, policies don’t really meet the criteria for the types of products normally purchased online: brand familiarity, returnable and product “understandability”.
A broker with DPM Insurance Group is going to cover all the bases an online experience may not. Consider these three points Smith highlights in her article:
- Financial independence: Can you afford a $500 deductible if a loss happens tomorrow? $1,000?
- Risk appetite (self-insuring): If a total loss happens, does the cover limit meet your financial needs?
- Risk adversity: If a loss of type ‘X’ occurs, are you willing to assume the risk?
At DPM Insurance Group, we offer a “hybrid” mix for those who might be interested in starting the process online.
As Smith suggested: “Hybrid digital approaches help guide user experiences and educating customers, while engaging advisors at strategic points to ensure purchasing success. The approach promotes self-service until the user indicates help is needed and/or business rules and conditions indicate potential product misalignments.”
At DPM Insurance Group, our brokers are here to make sure their client’s policies are providing financial protection to those in need when they experience a loss.