Insurance

Three Observations On Making Insurance Simpler (And Better)

Insurance and uncertainty come together. Industry experts understand this and try to use it to our disadvantage.
Three Observations On Making Insurance Simpler (And Better)
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Chief Product Officer, Aqeed.com
6 min read
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I’ve never woken up in the morning, and thought to myself: “I'm buying insurance today, and it has never felt more exciting!” I don’t know about you, but I certainly know that all my life, I have been hearing the same thing again and again from the industry experts: insurance is sold, not bought. Insurance agents and brokers swarm around us to sell us all kinds of insurance, and after that comes unpleasant long contracts with definitions and clauses that we pretend to understand, but can’t.

That’s how the journey started for us at Aqeed, with three words in mind: simplicity, transparency, and accessibility. Building Aqeed started by not only putting ourselves in the shoes of the customer, but we also put the customer in our shoes. We gave the consumers the steering wheel, and let them guide us on what they need. In the end, they did all the work and guided us to bring the simplest insurance solution.

Today, we share with you three observations extracted from our extensive customer research hoping they match the same insurance problems you are facing.

Observation 1: No one wants to pay for unnecessary coverage

Insurance and uncertainty come together. Industry experts understand this and try to use it to our disadvantage.

Proof? We sat with a few people, and found out that no one wants to buy insurance coverage that they don’t need. Humanity is too busy to shop for information due to the complex jargon, information asymmetry, and long contracts to be read.

Solution? Customers trust someone else to do this for them.

Reality? Those selling you insurance make sure you buy more from them, so they can benefit as well. 

How? A client buys an insurance cover for his car, and gets upsold two additional benefits from his broker: car replacement and term-life insurance, both of which he didn’t need.

Why? For term-life insurance, the person is single and has no dependent, rendering life insurance almost useless. For car replacement, the driver has never been in an accident before, so it would be cheaper for him to rent out a car, instead of paying for this cover, in the event of a future accident.

Lesson? When it comes to adding the certain benefits, be careful not to overpay. Although such benefits are relatively inexpensive, they can add up over the life of your contract.

At Aqeed, we bring the best user experience, more transparency and simplicity to the insurance industry, helping you make informed hence, better decisions. The important thing is that you understand the risks you are facing, develop a view on your risk tolerance, and keep a critical mind when you are offered to buy insurance cover. Our agents are here to understand your needs and advise you how to save on your next insurance purchase.

Observation 2: We tend to underestimate the impact of large, unforeseen losses in our life

A great study has been conducted in Behavioral Economics (Kahneman & Tversky, 1979) concluding that people, in general, prefer to avoid losses rather than acquire gains, of equivalent value, because psychologically the pain of loss is 2x more powerful as the pleasure of gain.

However, the pain of loss varies with the magnitude of the event, and there are certain events that break you. These are called the Black Swan events, popularized by Nassim Taleb, and are events that are unpredictable, have a major impact, and are rationalized in hindsight. People tend to underestimate the impact of such events. Consequently, they don’t protect themselves against them.

Insurance helps you build robustness against such negative events. Don’t fall trap in paying less today for a lower level of future protections against these events. When you protect yourself, make sure to consider the large losses arising from unforeseen events, albeit low probability of occurrence. These include a fire wiping out your home and its belonging, car crash that scraps your whole car, or the loss of your high-value wedding ring or jewelry.

Unfortunately, insurance cannot compensate for the emotional loss that comes along with the loss of a beloved asset, a health, or a partner. However, it can elevate some of the financial consequences associated with such a loss.

It is, by keeping this in mind, that we designed the customer journey at Aqeed to help you understand, compare, and buy the insurance you need. We have outlined our comparison tool to show you exactly how much you will be compensated in case of a total loss. Our agents will also you guide and explain to you all the covers while on our platform, and before making any buying decision.

Observation 3: People overpay for insurance without realizing

Companies compete for our attention. Day and night, we get flooded with insurance offers. When we try to book a flight, we get proposed travel insurance from at least four companies. This sort of email marketing sometimes catches us at the right moment, get us sucked into this moment, and make us purchase something we don’t need.

For instance, a lot of people buy travel insurance when booking their next holidays, forgetting they already have travel insurance from elsewhere, for example, from their existing credit card that offers free travel insurance.

Similarly, your life insurance policy might have personal accident cover. Yet some people buy it with their car insurance policy. Typically, these are small amounts that add up to your total bill.

How do we help this situation at Aqeed? We have created the Aqeed Safe, a digital insurance folder where you can store all your current insurance contracts (bought from our platform or from another source) in one place. Once you upload your contracts there, we remind you when your renewal is due for each of your contracts. Also, our insurance experts will check your contracts once a year, for free, to make sure you are getting the right coverage at the right price, and not overpaying for covers you don’t need.

While insurance will not deter the terrible things from happening in your life, it will, however, help you overcome the financial burdens associated with it. Always have this safety net in place to allow you to spend your time with your loved ones, free of worries.

Related: Collaboration Is Key As Old And New Business Models Collide In Traditional Sectors

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