Friends, family and colleagues often ask me why did you start a new business, and what is it?
The answer has its genesis dating back twenty years. Coming out of law school twenty-one years ago, I was employed by an entrepreneurial, growth-stage, managed care company. The interaction between insurance companies, their providers and customers fascinated me from the get go. Two decades later, the insurance industry has been slow to evolve and not much has changed.
As I progressed in my career and became an entrepreneur who founded, led and grew half a dozen insurance service businesses, I could not shake my intrigue and curiosity for the lack of transparency, neutrality and advocacy available to insurance consumers.
My own personal experiences as an insurance consumer have also influenced the decision to build Clearsurance.
The typical consumer buys insurance through an intermediary, usually a broker/agent, or through enrollment in an employer sponsored plan. Broker/agents who sell insurance are paid commissions and often times “contingent commissions” (more on that later) that are a percentage of the premium. This means the higher the premium, the more money the broker/agent is paid. See a problem here?
There is nothing necessarily wrong or illegal with the agent’s commission compensation model, although Elliot Spitzer and many other regulators and advocates disagree, but there is an inherent and structural conflict with an agent’s obligation to place the best interest of their client before their own economic interests.
To be sure, many broker/agents are ethical individuals who serve their clients’ best interests, but there is still a lack of transparency when it comes to choice and reputation of an insurance carrier.
So why does any of this matter? Insurance consumers lack clear lines of sight into the broader market for price, choice and reputation. In this day and age, that is backwards and patently anti-consumer. Consumers do not have visibility or access to the entire market, and its pricing, because this would result in more choice, lower prices and inevitably, lower commissions for agents, brokers and insurers.
It is commonplace for broker/agents to concentrate placement of insurance policies with a single or small number of insurance companies; however, this is not because they believe that insurance company is superior to others. Rather, agents/brokers are commonly paid extra commission compensation (also known in the industry as contingent, override or supplemental compensation) based upon the volume of premium they have with a specific insurance company. Although some regulatory disclosure requirements exist, most insurance consumers are totally in the dark as to this arrangement and how it negatively impacts them.
With the advent of technology, data transparency in the age of the world wide web, and insurance companies now selling policies directly to consumers while bypassing the agent/broker altogether, insurance consumers still lack access to crowd sourced data.
Shouldn’t insurance consumers have access to a combination of price, an insurance companies’ financial strength, and perhaps most critical of all, an insurance companies’ reputation for paying claims and honoring their policies? After all, who cares if you got a great price on your insurance policy if your insurance company has a reputation for not paying claims.
Moreover, employers that are also ERISA plan administrators have a fiduciary obligation to their employees’ access to choices that lead to a better range of insurance options. We intend to provide employers and their valued employees with better options than exist today.
As a twenty plus year entrepreneur and veteran of the insurance services industry, I can tell you that, as is the case with every industry, insurance companies run the reputational gamut when it comes to providing service in the claim’s paying process. Within the industry, some companies are notorious for the way they handle claims and the adversarial way in which they treat customers in the claim process.
Where we stand today, insurance consumers have no way of knowing or sourcing aggregated consumer feedback, ratings or reviews for specific insurance companies. Until now.
Clearsurance is the first neutral (we do not take broker/agent commissions), community-based crowd sourced rating and review platform for insurance consumers.
Our mission is to be a truly neutral platform, creating transparency, as well as better access to advocacy for insurance consumers. Better-informed insurance consumers are less likely to buy an insurance policy from an insurance company that fails to provide adequate service and fails to protect them when a loss occurs.
What does it matter that you are able to get a great price for an insurance policy if the company that sold it to you has a reputation for not being there for you when you need them the most?
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