Is Auto Insurance a Commodity?

[BigIVU]

Flo says, "SAME COVERAGE, Better Value." Is auto insurance a commodity where the only real difference is price?

 

[djs]

In general terms:
Auto insurance is a commodity
Home insurance is a commodity
Health insurance is a commodity
Life insurance is definitely a commodity

As an agent, we believe there is more to it. In fact, there is, but to a consumer, insurance as a whole is a commodity. Its highly regulated which keeps it from having any significant differentiation outside of service and how claims are handled.

As an agent, you know claims handling is important, but how much 'extra' is that worth? Nobody plans on needing to file a claim, so its hard to get a lot of extra out of that and the truth is, top tier carriers tend to take care of cut and dry claims pretty well. They push back on 'edge' cases a bit sure, but that is part of their job.

So to answer your question, Flo is correct, nobody should pay the higher prices at Progressive for their coverage.

Dan

 

[AZDave]

And that is the battle that agents fight every day. Price. What is your price, here is my coverage. They are told daily to shop their insurance for the best rate. Flo wants you to call direct for the best price, even if your with an agent and currently have Progressive. They will beat that price and do not care about the agent....commodity, you bet, that is what you get at their call centers.

Milk is on sale at this store this week, why buy it over there?

Old school here, but still a believer in 'package coverages' that many carriers include, ala carte that cannot be matched by Flo or the Lizard, and agents that sell on price, will lose that account next renewal on price....

Sure makes our job much more time consuming these past years due to the shop shop shop environment.

 

[BlockO]

This is why many consider auto insurance a commodity. Only about 8% difference between the first and the worst among public carriers.

Press Release - 2013 U.S. Auto Claims Satisfaction Study | J.D. Power

 

[jsplumb13]

Much like everything else in life, you get what you pay for. Insurance companies that have hugely different rates come about as a result of a lower bottom line. For instance, esurance does most of their claims handling processes online, meaning you rarely will ever have a face to face meeting with an adjuster. They also use a lower quality of pro shop, although you have the choice to take your vehicle wherever you like for the repairs. Other companies like Geico pay the lowest rates in the industry, and many repair facilities refuse to work with them as a result. Farmers has moved to an online claim submission system, and the helppoint claim system employees have absolutely no experience in the field. Again, you get what you pay for, and depending on the services and customer appreciation you expect, you can pay accordingly.

 

[xrac]

Much like everything else in life, you get what you pay for. Insurance companies that have hugely different rates come about as a result of a lower bottom line. For instance, esurance does most of their claims handling processes online, meaning you rarely will ever have a face to face meeting with an adjuster. They also use a lower quality of pro shop, although you have the choice to take your vehicle wherever you like for the repairs. Other companies like Geico pay the lowest rates in the industry, and many repair facilities refuse to work with them as a result. Farmers has moved to an online claim submission system, and the helppoint claim system employees have absolutely no experience in the field. Again, you get what you pay for, and depending on the services and customer appreciation you expect, you can pay accordingly.

I disagree that insurance is an area in which you get what you pay for. Unfortunately higher rates does not translate into superior customer service.