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Insurance In a “Commodity” Focused World

By April 14, 2015February 9th, 2018Insurance

Which one is cheapest?

We are all guilty of asking this question on many different occasions. Sometimes on small purchases, sometimes on big purchases, the fact remains, we treat many things as a commodity. A commodity is a product that is generally the same, with differences being unnoticeable, no matter where it is purchased, or no matter whom has produced it.

So, is Insurance a commodity? The answer to this question is a resounding no. This article in Insurance Thought Leadership does a great job of defending this answer. While I don’t believe insurance is a commodity, often perception, and some marketing, say it is. Both consumers and providers play a role in this narrative. It’s time to change it.

Two questions:

The first question, asked by the consumer is, “how do I make sure I’m not on the losing end of a policy that was sold as “the same” when it actually wasn’t?”

Educate yourself – Take a small amount of time to learn some of the necessary coverages. Don’t be afraid to ask your provider to explain the policy you are purchasing.
Don’t play the price game – There is a good chance you can always find a cheaper policy somewhere else. But at what expense? Do your best to secure a good price, but if you lead with price, you will get ripped off with price.
Ask your provider to prove their value – Don’t be afraid to ask your provider what is contained in your policy, or what value they are bringing to the table. If they can properly explain it, you should feel comfortable with any price you are paying. If they can’t, it may be time to find a new provider
The second question, asked by the provider, “am I allowing my product to be seen as a commodity in the marketplace?”

Educate yourself – Do you know what makes your product different than those in the marketplace? Are you up to date with Policy Language and recent litigation. Never stop learning!
Educate the client – Take time to discuss things with you client. Give them the information to understand what they are buying. If you don’t they will find someone who will.
Create value, then show value – As providers we must create value for our clients, and display this value. If we can’t, we risk being seen as a commodity. And they will always find a better price.
We all play a part in the perception of insurance as a commodity. In the end, it benefits both the consumer and the provider to reverse this perception!