Woe is Pricey

No surprises, but an ongoing problem for the insurance industry.

We surveyed a ton of people across loads of different products about whether price, or cover, was the most important thing to consider when buying insurance.

Predictably – 89.8% said price, 10.2% said cover.

This is a direct result of competing on price for so long. Customers no longer understand (or care) that there’s a difference between cover A and B, insurer C and D.

Look to technology for a comparison though and you realise it doesn’t have to be that way. If you’re buying a flatscreen, a new DSLR, a camcorder or whatever these days, chances are you’ll spend a long time studying specification sheets. You’ll wonder between 12 and 13 megapixels. You’ll have sleepless nights over the number of HDMI inputs on the device you lust after.. only three, when second choice has 4.. You’ll know every pointless little detail there is to know and why it should matter.

But when you buy insurance – you’ll say A is cheaper than B so you’ll get A.

My 3 espresso hypothesis is you do this because you don’t “use” insurance. It’s an intangible thing that you have to pay for because someone says you do. You don’t think you’ll ever need it, so you don’t bother looking at what it contains. The benefits of a policy will never be realised in the consumer’s eyes because they’ll never have to make a claim.

There is every opportunity though for a clever insurer to present their product in a wholly differentiated way. Toasted tobacco? Got nuthin on what you can find buried in policy wordings made purposefully unintelligible through years of obfuscation.

A consumer might not want to bother to understand all the ins and outs of a policy, but imagine the impact of seeing a list of features with big green ticks for product A, and big red crosses for product B. It’s going to make you think about that extra £20.. Why can’t my comparison site give me tick boxes to compare A with B like when I buy most other similar products?

Those who know me know I’m first to jump on any business model that includes a crusade in it, and I’m not suggesting we should try and make prospects understand why price isn’t the only driver… But I reckon all those who actually provide the cover are missing tricks left right and centre by listing the same old same old tired free legal, free breakdown, free blaaaaahhhhhh blahhhhhhhh who cares blaaaaaaaaaahhhhh.

More to come, initial thoughts from a First Great Western carriage to London Paddington.