Tuesday, October 7, 2008

An Accident Waiting to Happen

The headline in the ad plays to a persistent perception: insurance is a necessarily evil most people feel they'd rather live without. Promoting a claim to the contrary is going to do little on its own to improve that situation.

It seems harmless enough. An insurance company 'selling the category' without any evidence as to why the viewer should believe this advertiser"s claim over any other company.

But more damage will materialize over time. Why? The industry continues to raise expectations - with messages such as these - while failing to deliver on them.

If that sounds like a harsh assessment, one has to look no further than the average insurance policy against the background of chatter about insurance companies on many blogs and in chat rooms.

The reason why dissatisfaction and distrust are so pervasive in this category is because when it comes to claim time, most policyholders do not get what they feel they should be entitled to.

We at OFD think there are two contributory factors:

1) People don't really understand the full extent of the policy they have bought. Such policies are notoriously difficult to decipher (look no further than the length and language of your car insurance policy). The result is that many people only come to realize the nature of exclusions and deductibles once they are at claim time, when such discoveries are too late.

2) The pervasive imbalance of power between policyholders and insurance companies is magnified at claim time. Insurance companies hold all the cards: they make a determination which is imposed on the policyholder, who has no redress nor ability for arbitration. This fuels the perception of a lack of fairness and a feeling of inequity that's not hard to find on the internet, the legion of stories of people feeling literally cheated by the unequal relationship.

There are opportunities for the taking in this category. We're not suggesting that insurance companies open themselves up to arbitration necessarily (that would be a bold move indeed). But we do believe that the existence of such an unequal relationship - both in understanding of terms and in settlement mechanics - represents space for an enterprising brand to forge greater differentiation in this otherwise highly commoditized category.

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