The Brand That Covers Your Backside

I am continuously surprised by prospective clients that know absolutely nothing about their insurance programs, specifically the name of their insurer.  I know, insurance is about as sexy as Barney Frank in a fur thong.  I know, insurance is not your business and you leave the details to your broker or someone else in your company.  I know, you don’t know off the top of your head how much property coverage your carry on your building and inventory.  But the actual insurance company that represents the last stitch of fabric between your gluteus maximus and the open air, don’t you think that you should who they are?  The only give back I will allow is the fact that it is an “out of sight, out of mind” product, considering it renews once a year and you only take notice when you have a claim.

However, I believe that this may change, considering what just transpired with the AIG.  I have witnessed several insurers disappear before my eyes over the last fifteen years such as Reliance, Kemper, and Royal Sun Alliance to name a few.  AIG is different, as their insurance operations are financially strong, and it is the parent company that is strained.  But my point is that for something that is considered the last barrier between going out of business or surviving to live another day, you should know the insurance companies that you do business with and stay abreast of their financial stability.  In these volatile and uncertain times, it is ever so important.  If not, you could find yourself wearing chaps instead of jeans on a very, very cold day.

The Effect of Social Media on Insurance

I received a post from someone this week asking my opinion about price comparison sites for auto and homeowners insurance in the UK.  He wanted to know my opinion as to whether these sites would have an effect on the UK insurance market.  When initially aswering his question, I missed the point that the site was a comparison model, as opposed to a social media site.  But after reconsidering my initial opinion, my thought process remained unchanged. 

Social media has turned the internet into a living, breathing thing that shifts, expands, and displays physiological traits like a biological organism.  It is nourished by the “macrological” input of the masses and displays its nutrition in the way of statistical expressions that are generally accepted as truthful.  It is the ultimate expression of We The People.  It is this very premise that draws more and more people to the internet every minute, drawn to the internet for honest and credible answers to their specific questions.  And this is why I believe that price comparison websites will have an effect on the insurance industry.  Insurance carriers are no stranger to competition, and they have created countless strategies to compete on other criteria such as claims service and other value adds.  But when the lowest bidder continues to scoop up market share, the only recourse for other insurers will be to lower their premiums.  That’s exactly what they are doing now, as we are several years into a soft U.S. insurance market.  Of course this all changes with the same issues that harden insurance markets, like catastrophic events and economic changes.

I believe that social media is going to change everything(it already has, really).  It’s like all of a sudden the little dog pulls the curtain aside to reveal the so-called wizard behind the curtain, and everyone sees him.  Companies are going to have to get damn good at what they do or they will be exposed.  And they will have to be more competitive when it comes to pricing, or they will lose to those that are.

Merrill Lynch + Lehman Brothers X AIG = PANIC

I have never claimed to be an omnicient financial guru, so I’ll pass you the salt to go with my following comments; panic is never a good way to react to challenging circumstances.  Yes, things are quite scary, and I for one hate the lingering smell of uncertainty.  But if level heads prevail and we do our best to utilize the 6 percent of our brain capabilities, we will get through this. 

Most people are familiar with the AIG brand, noting mostly that it is a giant company, and a blue chip powerhouse.  But AIG is so much more to the insurance industry.  They are the groundbreakers, the company that everyone hates but still wishes they could be just like them.  Hank Greenberg, the ex CEO who brought AIG to their perch high above the rest of the insurance kingdom, was known for being a hardnosed, shrewd leader who knew what he wanted and wouldn’t stop until he got it.  You can consider AIG the anchor tenant of an idustry with many, many other players.

So here we are, with AIG in a corner with seemingly nowhere to go.  But similarly, like an eight thousand pound elephant in the same corner, you aren’t going to be able to move it.  AIG’s power and indispensible necessity is formidable, to say the worst, and they will still be standing when the smoke clears and the medics are hauling away the casualties.  And Merrill Lynch and Lehman Brothers?  I don’t really know, but I think that it is pretty much playing out as we speak.  Images of ex-employees walking out with boxes, and pieces of once great companies sold off like copper pipes stripped from old houses.

In the end, all of this will play out and we will not have any say in the matter.  This recession is in full tilt and we will just have to lash ourselves to the mast and weather the storm.  Just like we have done several times before!