Insurance Industry Realities That Go Unsaid

There are several realities of the insurance industry that go unsaid. But I think from time to time, these realities need to be mentioned upfront.

I understand why these realities go unsaid: insurance professionals know they don’t need to be discussed.

And I certainly understand that. After I graduated from New Mexico State University with my M.Sc. degree in Applied Mathematics in-hand, I went back to White Sands Missile Range to be part of the DoD team working on the ABM System. (Back because I was stationed at WSMR while I was in the Army working on the HAWK Missile System team.)

One of my colleagues and I played chess every day during our lunch. Finally, after 3 weeks or so, we began playing by first setting up the board as it would always look after our first 3, 4 or 5 moves. (Whether we played white or black, we never seemed to vary our opening moves.)

It is the same in the insurance industry. There are just some realities that never really get mentioned.

What are the insurance industry realities? They are:

1. Insurance, regardless of line of insurance, is not a commodity. It is irrelevant if any customers believe that insurance is a commodity: their ignorance doesn’t make insurance a commodity.
2. Every ‘move’ or action by an insurance professional, whether in a carrier or agency/broker firm, either explicitly or implicitly has to comply with the insurance laws and regulations of the jurisdiction of the place of the customer.
3. Every move by an insurance professional, whether in a carrier or agency/broker firm, has very real financial impact on their respective firms (carriers and producer firms respectively).
4. And, obviously, regardless of whatever technology or technologies an insurance firm uses to get-and-keep customers, the insurance firm remains an insurance firm. Insurance firms can never be transformed into any kind of technology firm.

With these insurance industry realities, insurance management and the advisors it uses can now proceed to consider how to potentially improve (whatever that means) the insurance industry.