Insurance Is Broken
Here’s How We’re Fixing It
by Blair Baldwin
I love solving big, gnarly, complex customer experience problems. I also love the idea of creating something of value to the world, which insurance is — at least in theory. In practice, though, insurance rarely feels like a good thing. It’s complex, abstract and confusing, expensive, irrelevant, adversarial… you get the idea.
Other than some frustrating shopping experiences, I never really gave insurance a second thought until I did some consulting work for an auto insurance agency that caters to online shoppers. What started as a part-time consulting gig evolved into a full-time job, and with it came a bird’s-eye view of how customers buy, use, and understand insurance.
Even more importantly, I got a firsthand look at all of the problems with insurance today. In my time in the industry, three general themes have popped up again and again, and they formed the seeds of why I started Quilt, my current company.
1. People love their phones, but hate talking insurance.
The vast majority of insurance is currently sold through an agent, and usually over the phone. But who would choose that as their first option? People may love chatting with friends, but few enjoy spending time on the phone with an insurance company. It’s always been this way, of course, and people put up with it because there was no other way. That’s just not true anymore. One of the biggest reasons insurance feels archaic and irrelevant is that it falls so wildly short of what we expect from a modern industry. Which leads me to….
2. Insurance is designed for a different era.
Almost all insurance products are designed to be sold through licensed agents, and there are almost 300,000 in the US alone. It’s a system that made sense when it was created, in a time before TurboTax, Amazon, and Expedia, but the world has moved on since then. Yet somehow, the insurance industry still functions pretty much exactly the same way it did 100 years ago.
Of course there will always be cases that are too complex for a simple online solution. Business owners are still better off letting their CPAs handle the tax returns, and a group vacation to an exotic location is still best handled by a travel agent who knows the terrain. The same is true with insurance — some people will need specialized coverage, and those cases are still best handled by an agent, whose expertise in navigating the options and tradeoffs that come with complex choices is invaluable. But for a large segment of the population, the approach can be a waste of time and money.
Because there are so many agents available to walk people through the often byzantine process of buying insurance, companies haven’t had to streamline anything. In fact, it sometimes seems like obfuscation is built into the product. But what would an insurance policy look like if you removed agents from the equation? How would the buying experience feel it was explicitly designed to be bought online?
3. There’s too much focus on customer acquisition, and almost none on satisfaction.
Insurance companies spend a fortune on advertising. That’s not just hyperbole either. Carriers spend a literal fortune — over $6 billion every year on TV ads alone. For reference, that’s about $20 for every person in America, the GDP of Monaco, or in outdated pop culture terms, enough to create 1,000 Six Million Dollar Men.
Carriers spend a literal fortune — over $6 billion every year on TV ads alone. For reference, that’s about $20 for every person in America, the GDP of Monaco, or in outdated pop culture terms , enough to create 1,000 Six Million Dollar Men.
As you can tell by the dollar amounts, the industry places enormous emphasis on acquiring customers, but not enough on providing a customer experience that’s outstanding enough to retain them. Part of it has to do with the nature of insurance — after all, neither carriers nor customers hope there will be occasion to file a claim — but it also has to do with a fragmented value chain that’s spread across agents, carriers, and the various third parties who manage claims. The result is a customer experience with multiple hand-offs that feels impersonal and disjointed.
These three themes became the foundation of Quilt. We are:
- Refreshingly simple and 100% online
- Made for a new, mobile, self-serve generation
- A company that values customers over time and as people
It’s a vision that reframes insurance from a necessary evil to a friendly and approachable method of dealing with life’s ups and downs. Reframing insurance is no easy task, of course, and an industry as large and as tightly regulated as insurance can’t be completely revolutionized overnight. But it can be done.
It sounds funny to say out loud, but this truly is an exciting time to be in the insurance business. The industry is in desperate need of new solutions to some very old problems, and we think we have the answers. There are hurdles to be sure, but none that can’t be cleared with some hard work, patience, and a bit of creativity.
Blair is the co-founder & CEO of Quilt.