By: William Forbes
In today’s consumer landscape, instant service, customization, and the ability to “do it yourself” are supported through web-based stores, communities, and applications. The insurance industry has taken notice. We are starting to see new and non-traditional insurance startups, which are hoping to address some of these customer demands through their unique web-based offerings. Recently, Forbes published an article (link here) on a company called Slice. Launched only in beta form for now, Slice is an on-demand insurance company that provides affordable policies for customers participating in home-sharing services, such as Airbnb.
There was also recent coverage on CNBC (link here) of a peer-to-peer, online insurance company called Lemonade. In peer-to-peer insurance, members are grouped by specific factors (usually the type of policy they have), and claims are paid from the group’s pooled money. In the case of Lemonade, members are being grouped based on their philanthropic interests, with the added benefit of being able to donate unused premium to selected charities.
It’s great to see the insurance market expanding and evolving. But, my first concern is always for the individual consumer, my clients. So, for those of you thinking about trying out a new insurance company or application, I recommend considering a few things to protect you and your family (Click to Tweet!):
1. What do the company’s financials look like?
The financial health of an insurance company is a huge factor to consider, because it determines whether the company will be able to handle clients’ losses and pay out the appropriate amount for claims.
2. Does the company have reinsurance?
Reinsurance insures an insurance company from catastrophic losses such as tornadoes or hurricanes. This coverage protects the insurance company from significant claims or events that may make the company insolvent. Reinsurance ensures the customer will receive coverage for a loss, no matter the situation.
3. What is the company’s A.M. Best rating?
This rating measures the creditworthiness of an insurer, and is another indicator of the company’s financial health.
4. How long have they been in business?
Length of time in the marketplace is another sign of a company’s suitability. It’s great to be the first to try something, but, I wouldn’t advise my clients to roll the dice when it comes to insurance. You want to know you and your personal property are covered when you purchase a policy.