Price is the only determining factor in buying insurance!

Everyone in the insurance industry knows this isnt the case, but consumers are being bombarded with that message. They are being told insurance is a commodity and that they should shop for the lowest price. GEICO has spent over $500 million a year convincing consumers that cost should be how they choose their insurer, and that it has the lowest price.

Companies that advertise in this way not only ignore the value of proper protection; they totally discount the professional service and advice that agents bring to the buying proposition. It makes total sense from their perspective, since agents are not involved in the purchase of coverage through them. As a matter of fact, the money they save not paying agents commissions helps fund their enormous advertising campaigns and keeps their rates low.

Every day I hear from independent agents who are fed up with hearing the GEICO ads and losing customers to them. They are tired of consumers calling to see if they can save them money with little or no regard for the adequacy of the coverage they carry and the quality of the insurance company that provides the coverage. The brainwashing is so effective that even highly-educated consumers with significant assets are lured by the promise of huge savings.

What should agents do? How can they compete? Is it hopeless to try and compete? I dont think so. I believe it is going to take a total commitment of both agents and companies in the independent agency system to draw consumers attention to what the insurance buying process is really all about. Purchasing insurance is about protecting yourself, your family, and your assets.

As an industry, we need to focus consumers attention on the protection they are buying. We need to draw attention to the professional advice and service an independent agent provides. If adequate coverage is not in place, then saving $100 on car insurance wont mean anything to a family devastated financially and emotionally by a serious auto accident. When a persons house has been burglarized, or has had a fire, the last thing on a his/her mind is, Did I save enough money on my premium?

We need to focus consumer attention back on what insurance is all about " protection, and offering the right protection at a competitive price.

In every communication we have with consumers, we need to focus their attention on the protection they are purchasing. We need to help them to understand the importance of having proper coverage should they have a loss. Whenever possible, we need to reinforce the professional advice and service provided by an independent agent. We need to paint a picture in their minds of the significant impact a loss can have on them " and their families. They need to appreciate the significance of having proper coverage backed by high-quality, professional service. Even with proper coverage and professional advice and service, a loss will have quite an impact on an insured and his/her family. Without adequate coverage and a professional working on his/her behalf, that same loss can be devastating.

I urge each and every independent agent and broker, and the companies they represent, to focus consumer attention on the protection insurance coverage provides. In everything you do, including discussions with clients and consumers, information offered from your agency and website, as well as your advertising and branding, keep drawing attention back to the important aspect of insurance " proper protection at a competitive price backed by professional advice and service.

Will it be easy? No. Companies like GEICO will continue to spend enormous amounts of money to focus consumers on the only potential advantage they have, and that is price. Will every consumer consider protection as well as price? No, there will always be a small percentage of consumers who will be attracted by the lowest price, even though it may not provide adequate protection or come with professional advice and service. Surveys show that consumers who buy from you on price leave for the same reason, and many times dont stay long enough for your agency to earn a profit from their business.

I do believe, if we are successful in getting consumers to focus on what they are buying and why, the majority of them will want proper protection backed by professional advice and service at a competitive price. Again, it is not going to be easy, but nothing worthwhile ever is.

As IIABNY member advocate and assistant vice president of member programs, Jamie Deapo acts as communicator between agent, company, and trade association. His 15 years of experience as an independent agent coupled with a background in underwriting and marketing for insurance companies has given him a well-rounded perspective. A daily dose of conversation with independent agents from every corner of New York helps him understand the issues and concerns of the day. Deapo is also the outspoken voice on IIABNYs Word on the Street Podcast. Listen to these candid conversations at www.iiabny.org, by clicking on the News link on the left-hand side of the homepage, then Newsletters and Publications and Word on the Street Podcast.