Sitting in a waiting room the other day, I struck up a conversation with a gentleman (let’s call him Bob).
He was waiting for his fiancé and the conversation eventually turned to what we did for a living.
Bob’s company, where he had worked for many years had just closed down, leaving him unemployed. He wasn’t sure what he would do yet but said he might be able to semi-retire as he had a skill-set developed over the years in Safety that could be part of a new consulting practice.
I was happy to share that I had been in the general insurance business for many years specializing in commercial clients. In addition, I consulted with a couple of industry stakeholders helping consumers deal with misunderstood and contentious insurance issues.
So, what would his reaction be? Would it be the inevitable negative response? “Oh, insurance companies never pay.” “They make tons of money.” “They are just here to rip us off.” I wasn’t surprised when his response was the “tons of money” response. Another comment he made was “insurance is just insurance”.
To that I replied that he was not alone in how he felt because as far as I was concerned, sometimes our industry does not do a good enough job of explaining the whole “insurance” thing to the consumer. The conversation revolved around a number of factors after that but let me share some of those with you.
“They make tons of money”
Yes, insurance companies make money. That’s the whole idea of being in business, isn’t it? Whether you are a business owner or an individual you need to make money to survive. The insurance companies are no different. It’s really not about making money though. It’s really about how much is too much? What amount of profit do you feel is an acceptable amount?
The one thing Bob didn’t know was that insurance industry statistics are readily available.
I thought an overall industry-comparison might be helpful.
- According to Statistics Canada “From 1996 to 2000, the average annual rate of growth in operating profits was 10.5% compared to 10.3% earned between 1991 to 2000.”
- The entire Property & Casualty Industry based on IBC 2020 Facts in Canada from 2013 to 2019 was 7.5%.
And finally let’s take an example from a report I found on line from Macrotrends
” Royal Bank of Canada net profit margin as of January 31, 2021 is 20.19%.”
“Insurance is just Insurance”
Bob’s comment was interesting. What is insurance, I asked? Well, it’s something that takes care of you when something happens. It should cover everything.
Yes, and a car is just a car. Right? Not if you ask any car buff. Normally if you go to buy a car you know the manufacturer, model, year, options and all the other “car stuff” so you know what to ask for and it’s a lot easier to compare the price.
Insurance is not just insurance. It’s a contract with different……
- (manufacturers) or “insurance companies”,
- (models) or “coverage” and
- (options) or “endorsements” available.
The consumer doesn’t normally know the difference and our industry has to take some of the responsibility for that. For many years, price has always been one of the main factors that we focused on. So, when most people buy insurance that’s what they ask for – insurance. That’s when price becomes the determining factor.
The Broker selling the insurance may not take the time to explain the different coverage and options available either because he/she doesn’t know or it may be because “making the sale” is the most important thing.
Don’t get me wrong. There are a lot of dedicated, educated insurance professionals in our industry who truly care about their clients. Just make sure you vet your provider. Check this out! Goldilocks and the Three Bears Insurance Brokerage
The world is changing rapidly and insurance is no different. Our industry focus changes, contracts change and people move from one job to the next. I plan on being around for a few more years as I’ve enjoyed the industry. I learn something new everyday most of which comes from dealing with the consumer. That’s why I’m here. What I do is important. Can you just imagine what our world would be like without insurance? Not sure? Check this out. What if Insurance Didn’t Exist?
Remember I’m always here to help and answer any questions you might have.
Heather Cournoyer, CCIB, CIP Get in Touch