How Different Kinds of Insurance are Different
Part 2 of the Insurance Onboarding Series; the story of one average American's compounding confusion about insurance.😵💫
In the previous post of this series, “ELI5: What is insurance?” we went through how insurance works at a high level – what the customer gets, what the company gets, and the major customer-facing touchpoints like applications, quotes, policies, and claims. If you haven’t given it a read (or a listen), it’s about 4 minutes long, and worth your time. 🎺🤏🏼
(That’s me, tooting my own horn.)
In this post, I want to take those common, customer-facing touchpoints, and remind everyone how they show up differently across insurance products.
And as a last reminder, I’m writing this series of posts because I believe that America needs more designers, product people, and strong tech talent of all kinds interested in insurance. It’s broken. It sucks. And it’s not getting better fast enough. For a deeper dive on my “why,” check out the introduction to the series here;
Ok, let’s get started!
Little Joe Schmoe’s journey through insurance-land
Let’s imagine the average American’s journey through different insurance products as they grow up.
First up is likely AppleCare (or some other smartphone coverage), given two wild stats; 45% of kids age 10-12 have a smartphone, and 87% of American teens specifically own an iPhone. Little Joe Schmoe probably doesn’t see the purchase of his smartphone coverage or even pay for it, but he is aware that if he breaks his phone screen, there’s something insurance-y afoot.
Next maybe Joe is aware of a caregiver getting travel coverage on a flight? Again, he does not shop, pay, or interact with the coverage, but he knows if the hypothetical snow storm impacts his family’s flights to the hypothetical wedding, his Mom hypothetically has someone to call.
Then around 16 years old our average American, Joe Schmoe, is exposed to the cost of car insurance, but he probably didn’t have to shop for it. Parents often handle the car insurance decision, whether purchasing a standalone policy or adding their child to their existing car insurance plan.
Joe is given an insurance card, and some proof to keep in the glove box incase he gets pulled over because it’s required by the state. He does get in a minor fender bender (everyone’s fine) within the first 6 months, and has to file his first insurance claim. The cost of his car insurance goes up.Next up; renters insurance, as requested by the landlord of Joe’s first apartment. This is likely Joe Schmoe’s first insurance shopping experience. If he chooses to purchase a policy from a modern insurtech, he’s going to get a pretty good impression of insurance.
He’ll learn that coverage can be general in nature, or extend to specific high-value items like his bike or guitar. He’ll also get a sense of how paying a little more each month means he could get more money back from his insurer if something bad happens. This is called an insurance limit, but at this point words like premium, deductible, and limit are all pretty vague to Joe.
Much to his dismay, no insurance card this time, but he does have to get proof of insurance for his landlord - something called a Certificate of Insurance? He downloads his policy… and he’s not sure why. Just seems like he should have it.Then the biggest doozy of all in his mid-twenties; health insurance.
Health insurance plays by it’s own rules in insurance-land, and Joe knows that its expensive, and frustrating, and a source of lots of political fighting in America. If he’s lucky, Joe was on his parent’s health insurance coverage until he turned 26. If not, he may have been offered coverage by an employer, though that is increasingly unlikely.
Shopping for health insurance is tough. Choosing from employer-provided plans is tough. It’s all tough.
Joe is given an onslaught of choices to make, and a short window to do so called open enrollment. He has new acronyms to learn like HDHP and PPO, not to mention copays, coinsurance, deductibles, and out of pocket maximums. It’s a lot.
He texts some friends, makes a semi-educated choice, gets a lot of junk from his new health insurer in the mail including a flimsy insurance card, and keeps on truckin’.
Joe later learns that he has to file a health insurance claim after his first appointment with a therapist, but doesn’t when he goes to his Primary Care doctor. He wonders if that will make the cost of his coverage will go up…Last (for the sake of this series) Joe decides insurance sucks, and he’s going to build a startup in the space. He convinces a few friends to join him, raises a small round of seed funding, and soon learns that he needs to purchase business insurance — maybe even multiple insurance coverages at once. He has no idea what it’s going to cost, how long it’s going to take, and what he really needs given the size and stage of his startup.
Joe purchases General Liability Coverage, Cyber Coverage, state-required Workers Compensation coverage for his team, and gets back to work.
When insurance renewal comes around a year later, Joe is surprised. Unlike all the other insurances he’s had in his short life, his business insurance doesn’t just auto-renew. But unlike his car or apartment, his startup has tripled in size over the last year, and he hired a bunch of people. He fills out a renewal application updating his business info, and his insurance costs go up.
Let us commiserate with Joe
In each of those insurance experiences, the key pieces - application, quote, policy, and claim - behaved unpredictably. They’re hidden or visible, required or not required, the buyer’s responsibility or someone else’s. Joe is always having to leave behind what he just learned, and never quite sure he has the right thing at a reasonable price.
We’re going to dig a little deeper in the next post, but for now, I just want everyone to commiserate with Joe. And yourself! Cut yourself a break if you’ve been confused or frustrated by insurance - it’s kind of a mess.
We’ll pick back up in a few days,
Carrie
On a roll? Let’s go for 3!
