You wouldn’t go to an auto mechanic and ask for medical advice. A dentist probably is not the best person to give legal advice. So why then is America turning to technology companies for insurance advice?
The insurance industry is highly regulated for a reason – consumer protection. What does that protection look like? Education requirements (both pre and post licensing), background investigations, financial audit and oversight, legislative authority and enforcement, consumer inquiry, complaint response, and advocacy, as well a public information, education and liaison efforts are just the highlights of what regulators in every state does to protect consumers. Taking these people out of the equation creates an environment where consumers are vulnerable. Who exploits this vulnerable state the most? Technology companies. Don’t believe me, let’s look at three examples.
Google Compare was, by all accounts, supposed to be the end all solution to the perceived difficulty of shopping for auto insurance. The service was intended to provide a platform where consumers could comparison shop for auto insurance, credit cards and mortgages. However, after just one year of US operations, the tech giants have realized that maybe it is best to stick to what they are good at (search engine marketing and advertising) and leave the insurance quoting/comparing to the professionals.
Zenefits is a human resource software startup and tech darling valued by investors at $4.5 billion in the last year. Their platform is great at revolutionizing the HR process of many companies, however they got into hot water when they started selling group benefits coverage. In fact they are currently under investigation in several states for illegally selling insurance coverage and falsifying licensing documentation.
Over the last several days Uber has taken a public relations beating in the wake of the Kalamazoo shooting, but the trouble with Uber drivers started long before that. For years, stories of verbal and physical abuse by Uber drivers has been reported with a lack luster response from Uber. What does this have to do with insurance? It demonstrates lack of systematic approach for consumer protection. In addition to issues of personal safety, the insurance industry has been in a heated battle with Uber over coverage for their drivers. In many states there are still periods of time where Uber drivers and other are not covered under either Uber’s policy or the drivers thus leaving many consumers unprotected.
Independent agents, like Blue Lotus Insurance Brokers, on the other hand consider themselves to be trusted advisors. Techniques, tricks, and technological tools do not create the trust needed to cultivate consumer protection – only character built and maintained over time by small actions can do that. These tech companies are now starting to realize that insurance and risk management aren’t as easy as creating a tool to commoditize it. Consumers need advice and solutions from professionals not algorithms and one size fits all results. So again I ask, why then is America turning to technology companies for insurance advice?