Do we need to talk about insurance?

We all benefit from insurance policies

There is a lot of criticism in the media of big financial institutions, banks and insurance companies. No one can have missed the scandal of how banks mis-sold payment protection insurance (PPI). But there is a real risk of the baby being thrown out with the bathwater. PPI started out as a useful product – it makes mortgage payments if a mortgage holder is unable to do so for certain reasons. And most insurance policies are beneficial – we can drive with more confidence because we know that all (legitimate) drivers are also covered by insurance policies.  And if our house is damaged, then insurance will pay the amount needed to repair it, even rebuild it, which may be far more than we could afford ourselves.

Why don’t people like insurance companies?

There are lots of reasons why many customers don’t like their insurance companies.  One of the reasons has been an unexpected side effect of the way price comparison websites work.  These sites are used by the many of us to research motor and home insurance policies, and they do a great job in getting the cheapest price for customers – that is a good thing. But like lots of things in life, you get what you pay for. Insurers have realised that the lowest headline price is what attracts customers, not lots of product features. And customers have realised that “adjusting” the information they give the insurers through price comparison websites may get them a lower price. So some customers may “forget” about information that will make them look a worse risk and put up the price of the policy. Or even make up some information to get a cheaper price.


Big Brother wants to watch you

So right now communication between insurers and customers via price comparison websites is bad. Many customers don’t look at what insurers tell them beyond price, and insurers know that they can’t believe some of the information some customers give them.  As a result many insurers are trying to use Big Data to understand their customers better, rather than asking the customer questions directly.  Big Data means the information trails we leave as we live our lives online. Sometimes we remember to tick the box to keep the trail private. But a lot of times we don’t tick that box, particularly when it is stuff we do on our phones.  What we buy online and the items we type into search engines says a lot about us. Insurers want to draw conclusions from the sort of people we are and the way we live our lives, to see how likely we are to make an insurance claim.


We need to understand how we are rated

For customers of insurance companies, this just magnifies an existing question: If we don’t understand how insurance companies assess us, how can we change – legitimately – the way we behave to get better prices?  And that has a real world impact on customers, because changing the way we live to get better insurance prices would probably mean benefiting us as well as the insurer. If we were told that having better security around our house meant lower premiums, or checking our pipes during winter meant lower premiums, that might nudge us to improve security or make those checks, which might prevent a burglary or the damage from a leak.


PolicyCastle enables a different way of communicating

At PolicyCastle we explain how insurers assess our members, and how members could make changes to reduce their insurance premiums and reduce the risk of burglary, damage and accidents.  We know that is a win-win for members and for insurers. And we link our members to ways they can make those changes easily, and prove to the insurers they have made the changes, whether that is a boiler servicing contract or a motion-sensitive light to go above their front door.


We want to rebuild trust between insurers and our members, for everyone’s benefit.

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