Insurance Companies Were Once Designed to Be Consumer Champions--How Far We've Fallen


It's easy to forget, but once upon a time insurance was designed to provide major value to consumers, without the hassle experienced in today's average insurance transaction.

In ancient times, various forms of basic insurance occurred to protect sea voyages that lost or were forced to throw cargo overboard. Then, insurance was a compact between two or more parties for mutual gain.

Back then, insurance was used as a tool to create greater wealth and freedom, providing the protection needed to launch great endeavors or recover from catastrophic losses. Insurance provided a second (or third, or fourth) chance to people, and in the process changed entire economies, making possible many ventures that enriched the world.

My, how far we've fallen.

Make no mistake: insurance still plays a critical role in society. But somewhere in our long history, we've lost our way.

What used to be an agreement for mutual gain, sealed with a contract and a handshake, is now bogged down in legal documents, exceptions and jargon that only one party (insurers) actually understands. It's never been harder to buy with confidence and a clear view of exactly what your premiums are paying for. And far from enriching society, insurance is enriching a few--because everyone needs insurance, but there are relatively few parties from which to buy it.

It was easier in the past, to be sure--contracts were basic, trust was mutual and needs were simpler. But insurers were also consumer champions back then, truly interested and aligned with the good of customers. However, by looking at the differences between then and now, we can start to see where we've gone wrong.

Regaining the Human Element of Insurance

One common thread throughout insurance history--before the modern era--is that everyone was aligned on the dangers involved. Consider: in ancient times, a sea voyage was an undertaking where all parties knew, almost certainly, that not everyone or everything would survive. That's a truly jaw-dropping thought: that every single trade journey over water was our equivalent of a manned mission to Mars. The stakes were a little higher than getting in a fender-bender on the way to work.

The same goes for loss of any type. There's no denying that loss of any sort, even in modern times, is tragic to bear. No one should have to face the thought of losing their home, business or a critical asset. These losses have very real impacts on millions of families today. But in the past, a loss of this sort could mean complete bankruptcy or even death, since little formal infrastructure existed to support people who lost everything.

This is one of the reasons why you see forms of insurance that were started in ancient times by fraternal, professional or religious organizations: they took care of their own because no one else could or would.

Today, we've lost sight of the fact that a real human being sits on either end of the transaction. And while we're comparatively well-off compared to the ancients, real human concerns lie behind every insurance interaction, no matter how trivial or severe the risk.

What does this mean? It means that insurers view consumers as numbers in a database. It means that consumers view insurers as faceless entities behind bland mascots. Even if you can still call up your local agent, they may not be truly aligned with your best interests, depending on the insurers they represent.

Make no mistake: technology is a critical ingredient in creating a truly customer-centric business model. But technology's highest value is making insurance easier, better and more affordable for a living, breathing person.

We've lost the human element in insurance. And if there's one thing the history of insurance can teach us, we need to get it back. Only then will insurers truly be consumer champions again--when they start seeing consumers as people, with real hopes, dreams, fears and needs. To start doing that, they might want to pick up a history book.