Why is Insurance Price-Focused?

When training insurance agents, I get asked this question all the time. Why is insurance price focused? While there are many reasons insurance is driven by price. One of the main factors is positioning. In marketing positioning is how a product is perceived in a market.

This is a problem because over the last hundred years in all forms of advertising, insurance has been price-driven. Looking back over the years at old advertisements from the 50’s, there are headlines which state “save $20 to $30 dollars”, “think real good deal”, “this is a way to secure cheap insurance”, and “save extra money on your auto insurance”. Throughout all of time insurance has been driven on saving individuals money.

Now with this perception, it allows insurance companies to advertise insurance a lot easier. When it comes to advertising “goods” it is very easy to do. Advertising services on the other hand is extremely difficult. When we exchange money for a “good” that is advertisable and is how it can be positioned. Your vehicle gets damaged, your vehicle is a “good”, you exchange money to get your “goods” replaced. A tree falls on your house and your house is damaged. Your house is a “good” and so you exchange money to fix your “good”. With all these advertisements it is called a single benefit offer. Where you exchange money to get your “goods” fixed. And if all insurance companies are advertising in this way. It’s easy to see how it can become very price-driven.  Individuals want the cheapest price to get their “goods” fixed.

However, that is not entirely what insurance offers. If insurance was only getting your car fixed. Then yes, price would be a valuable option. However, there is a lot more that goes into insurance than the price we pay to fix our “goods”. One industry that does a great job at advertising insurance is personal injury attorneys. Personal injury attorney’s job is to sue individuals after they cause a car accident. This is one of the greater forms of showing what insurance is actually used for, liability. The damage you cause to others. Not necessarily you’re “goods” getting fixed, but the service behind protecting your livelihood, your assets, and your retirement. That is a service. Services are very difficult to advertise. Now because of this problem over the last 100 years insurance has been positioned this way.

Our solution is for you to reposition your own individual agency to be value-driven. Not price-driven, value-driven. You can reposition your own agency. Repositioning is a marketing technique that allows you to penetrate new markets, sell more policies, and increase your overall productivity. With this repositioning, we recommend advertising your own agency. Not the company you represent, but your own personal systems and processes that make your agency unique.

Now, advertising your own process allows you to show a holistic benefit to your client. We recommend advertising your sales process. What experience a client can receive coming to you, the agent. Help them see and perceive the value behind insurance. At InsuraRisk we advertise our sales process which allows you to educate and actually provide protection for a client they understand. Advertising it in a one-minute video you can send to your client prior to the appointment will set you up to be value-drive, and move you away from the price focused insurance world that we have lived in for years.