No competition?

I’ve not met anyone who loves their insurance. I’ve met plenty of people who complain about insurance pricing, claims, hassles, billing, coverages, self-centeredness, and arrogance. Consumers love businesses that love them back and insurance just doesn’t do that. I think it’s because there’s no competition.

There’s plenty of competition between insurance companies, but there’s no competition to insurance. Having some might influence how they do what they do for us. And the best competition I can think of is something that reduces the need for buying insurance in the first place. If consumers diverted 30% of their insurance budget to loss prevention and that lead to a reduction in insurance purchases by 50%, that’d be a win for consumers and a loss for the insurance industry, wouldn’t it?

We’re fortunate in 2022 that there are interested people with technology and data and products and services who see the opportunities of giving people a chance at winning like that. There really are ways of influencing your own exposure to loss and I think it’s realistic to hope for a small revolution to the paradigm that insurance is the only game in town. The appreciation for how much control we have over our own exposure to loss is growing with these steady advancements in what’s available to help.

There’s nobility in the lifeguard who pulls a victim from the ocean, but there’s more value in the lifeguard who stops someone from entering in the first place. Placing that kind of knowledge and prediction into the hands of the consumer will be the key. The possibility that we individually get to address the lack of competition to insurance exists like never before.

A Great Opportunity

Inflation, bear market, recession, racism, homelessness, left vs. right, January 6, gun violence, Pride subversion, Covid, science, deep fakes, Ukraine, wildfires, terrorism, floods, monkeypox, media wars, drought, cancel culture, anger, supply chains, student debt, healthcare costs, mistrust, misuse, drugs, clean water, gerrymandering, Supreme Court, hoarding, division, isolation, individualism, detachment.

Love, joy, peace, patience, kindness, goodness, fidelity, gentleness, and self control have never been more prized, striking, or potent as right now.

What’s coming

As already mentioned a few times, I’m reiterating here a warning on trends I believe will be coming to insurance consumers that most people won’t like. In it’s simplest form, insurance is a funding mechanism that takes money from a large group to subsidize a small group. If small enough in size, or small enough in what is demanded, the large group usually contributes enough to care for the small group.

But when the Texas power grid goes down, or when wildfires ravage the West (annually), or when climate change brings a hurricane/tornado/flood-of-the-week, or when inflation and supply-chain interruptions make cheap things expensive, or when people consider their insurance a disincentive to take preventative loss mitigation investments (it’s called Morale Hazard and the definition is below), or when texting & driving is rising and not falling, or when insurance companies sell using red herrings, the small group and their demands outpace the contributions made by the large group.

And if the spike in size of the small group were an anomaly or aberration to the trend, no big deal. But it’s not. And as the market creators for the exchange between the large group and the small group, the insurance industry is about to make significant changes to increase the size of the large group and reduce the impact of the small group in response.

  • Premiums will be going up, up, up as supply will be going down, down, down
  • Proof that you invest in prevention will affect qualifying for insurance to subsidize your future losses
  • Data science will outpace customer service – winners will compete on proactive knowledge, not reactive care
  • You caring about you will be the big deal. Risk management shoppers > insurance shoppers

I think people believe that insurance is manufactured by a company and then sold to consumers like a car or bicycle. Insurance is just a reflection of the decisions and experiences of the collective. The money used to pay claims is ours. It didn’t come from an insurance company, it came from us and there’s not enough of it to go around. So the model is broken, either in the amount needed or the nature of the exchange. The banal “How can I get the best coverage for the best price?” isn’t asking the right question. The right question is, “How do I reallocate my insurance dollar to my loss prevention dollar so I won’t need an insurance dollar?”.

What if:

What if:

  • 80% of successful families report that world events affect their personal perception of risk?
  • Nearly half of all families say recent decisions and behaviors have been affected by concerns about the future?
  • A majority of families want stability to be a built-in part of their financial plan?
  • A majority of families will tie their engagements, purchases, and relationships to emotional end-benefits?
  • Only 2 of the 10 most severe perceived risks are insurable (as reported by the World Economic Forum)?
  • 83% of successful families want help preventing the bad day from happening?

Does an opportunity exist to steward a tailored response to modern risk and resilience in the context of a family’s overall wellbeing? What would that kind of firm have to prove in the way of proclivity, understanding, competence, and deliverables in order for a family to be motivated to engage? How likely is it that an expert professional could actually close the gap between fear/worry/mistrust/anxiety/uncertainty/vulnerability/isolation and confidence/contentment? How valuable and attractive would that be if they could do it?


I want to take a moment to attend to gratitude. I focus my attention on addressing the worries and concerns of families; sometimes as a planner, other times as a crisis manager. An unfortunate effect is that my experiences sometimes lead me to dwell on roadblocks, speed bumps, and negativity. And that’s kind of a bummer.

It also disrespects the great fortune I have at being able to do what I do, to live where I live, and to share my business and recreation with people whom I care a great deal for. So I find it helpful to periodically pause the to-do list and business planning and case management and recharge with moments of reflection on the stores of energy and resources I’m lucky to have so readily available.

And writing about how I’ve been sitting here reflecting on my gratitude serves as an accountability partner on keeping me focused. The whole reason I believe in and commit to our Less Worry | More Happy trademark is because living like we’re supposed to depends on our ability to conquer fear. And acknowledging and being thankful for having and being more than enough is a weapon in overcoming worry.

Defensive Coordinator

Although often mistakenly considered just a “money thing”, real wealth management expands its attention from merely financial capital to include a larger mix of things that contribute to the full scope of a Life Portfolio (I strongly recommend reading The Wealth Creator’s Playbook for an examination of this concept). And for those who value partnership in “growing” their Life Portfolio toward a desired outcome, there are wealth management firms all over the place wanting to help you get there with a financial and wealth management plan.

But what is rare is the dedicated expert who plays the role of defensive coordinator to that plan. What I’m talking about is a person whose sole job is to see where the plan might be specifically at risk, to influence the extent of its impact, to allocate finances toward prevention and recovery, and to direct a crisis toward restoration. It’s rare because although the best opportunity for someone performing that role rests in the intimate relationship people have with their wealth manager, the proclivity of an expert who can do the best job exists in another industry where people get paid for selling a product instead of stewardship.

There are 3 reasons why this needs fixing. First, and sadly, bad days do happen. Optimism bias, which explains how we underestimate our exposure to loss, is a real thing. Understanding our true exposure to risk is important because naiveté and ignorance are not effective or mature. Second, the paradigm of being referred to an insurance agent as the defensive effort is grossly insufficient for reasons I’ve mentioned many times. Insurance is a wonderful financing tool for limited negative experiences, but it provides no avoidance, mitigation, or control and it rarely lives up to expectations. Insurance alone will almost always disappoint. Third, the landscape of modern risks facing families is evolving and expanding. Yesterday’s problems aren’t today’s problems and the glimpses we’re getting of emerging risks is even more complex and severe. So I’m going to bet that whatever process you think you follow to defend your wealth plan today will need some updating.

Our trademark is Less Worry | More Happy so we don’t believe in fear mongering. But we do believe that being intentional and sophisticated about how your plan might be interrupted by an unfortunate event, lawsuit, or an unscrupulous person is rooted in sound values. And in my work with families I’ve yet to find someone who doesn’t feel at least a bit of liberation from worry and more free to pursue all the abundance of their Life Portfolio because they’ve taken a step forward with a defensive component to their plan.

Our Best Hope

Insurance provides some money to pay for some things on only some bad days. If it is your primary risk management strategy, it is insufficient and inefficient.

Between policy changes, eligibility restrictions, deductible changes, sub-limits, and non-renewal postures, the availability of insurance coverage is shrinking. In the meantime, modern risks that normal people face like home renovations, domestic-employee hiring, cybercrime, electronic aggression, shared-economy use of assets, micro-livery occupations, multi-generational home occupancy, severe weather, and at-home employment are expanding. The gap between what insurance wants to do and what a family needs is growing.

Add to that a steady industry decline in attracting, training, and retaining talent that can consistently deliver a consumer experience that people are used to getting elsewhere (we still expect people to sit on hold for minutes upon minutes to get help, to wait for two days to get a return email, to have claims authority centralized to one person, to mail consumer unfriendly notifications of premiums or policy changes), it’s no wonder that I’m worried.

Will a consumer’s experience with their insurance be better tomorrow than today? It’s a fundamental question that you’d think would be a cornerstone of the industry’s strategic plan to answer. Yet companies talk today about the same streamlining and improved communications and efficiencies that they were talking about when I started 31 years ago. New techniques and new technologies, but same plan. The industry has said the same “communicate better, report faster, resolve happier” forever and how have they done, generally?

And all the while, what insurance companies want the most is your business. So they produce low-level commercials that avoid much content and they visit my office and try to grab more shelf space. But what they won’t do is re-invent. Insurance is what it is and it is not a mature approach to addressing the risks you face if it’s your sole hope. It should be a component of a plan, not THE plan. All day long I ask people why they are spending $1.30 to pay for insurance on things they could resolve themselves for $1.00, or prevent altogether for $0.50. There’s work that can be done so that you won’t need to use your insurance in the first place. Not having the bad day is always better and collectively, if the need for insurance decreases, the competitive pressure to attract you to them will increase. It’s our best hope.


The typical approach to managing risk in a family is one best described as Respond & Recover. The whole insurance industry is predicated on the value of this approach as it supplies products and professionals dedicated to putting families back on track after a loss event. And this paradigm is ingrained into the expectations of consumers and their advisors to the point where insurance is seen as THE risk management option available.

But a complementary approach to managing risk in a family should be one that I’ll describe as Predict & Prevent. There should be an overwhelming push to build an ecosystem of products and professionals dedicated to stopping the bad day from happening in the first place.

Fortunately, I believe a wave of change is coming in that direction so that the new paradigm for managing risk in a family will incorporate both. Markets love efficiency and not losing is more efficient than recovering from a loss. Technology and sensitivities to Big Data that drive the arbitrage within the insurance industry can be flipped to the prevention market where there’s profit from behavioral change. And if presented an alternative, consumers will prepare an answer to the question, “how much would you spend to not spend money on insurance?”.

Practically speaking, this movement should come from the insurance industry where the experience and proclivity to be concerned with family risk lends itself best to adding a Predict & Prevent mindset. Very little investment would be needed if those in the insurance business shared this vision and expanded where they need to go. But economic vacuums will be filled by someone else if the sacred cows of “the way things are” aren’t dealt with.

A car company changed the energy market, an information company changed brick & mortar shopping, a consumer electronics company changed the music industry, and a philosopher(s) might be changing centralized finance as we speak. None of these disruptions spelled the end of the original market, but the biggest winners were the outsiders who didn’t invent the mechanisms of their movement, but merely applied them to the vision that “this is better than that“. I bet the original insiders in those markets wish now that they’d been their own disruptors. And as I predict that someone will be successful selling the vision that prevention is better than reaction, we’ll see who that someone will be.

Non-Transactional Mindset

Transactional relationships are potentially ruinous because they hide what you aren’t getting behind stuff that doesn’t matter. The game becomes winning the transactional experience, not providing something meaningful. The worst: you pay us less to give you something you think you have to have. Second worst: I want good customer service. The reason these are wrong is because if I can convince you of these two, you may not think to realize that you’re buying garbage.

Proof? There are two insurance commercials on TV today that promise low premiums while using examples of scenarios not even covered by the policies they sell. That’s unbelievable to me. And one of the highest rated insurance companies out there has some of the biggest gaps in coverage.

I think the overarching lie is that defending your family against potential financial calamity can be solved by making a purchase. No. Defending your family starts with a list of thoughtful questions, not your checkbook. Defending your family depends on a plan that you’re involved in making, not something that comes off the shelf and handed to you. Defending your family depends on wisdom gained, not by falling for superficial gimmicks.

I think insurance is important and I’m not critical of the product. But there needs to be someone championing the truth that buying insurance is incomplete. It doesn’t prevent the bad day, it doesn’t answer when it’s better to NOT buy insurance, it doesn’t offer anything until you have the bad day, and it’s limited in the scope of help it can provide. The insurance transaction is just playing a role, not telling the whole story. So look instead for either a more complete relationship from your insurance expert than just a transaction, or find a complementary relationship that can do more than the product can.

Favorite Questions

What events could move my financial plan out of alignment? What are the probabilities of those events happening? Can my behaviors or circumstances influence those probabilities?

What are the smallest possible changes I can make that’ll have the greatest impact on my exposure to risk? What’s the largest possible return on the smallest possible investment?

How resilient is my financial plan to loss? How much financial horsepower do I have at my disposal for recovery? How can I influence the parts of my financial plan that will need to be sacrificed?

How can I use the confidence gained in answering these questions to better align myself with my current and future plans? How does taking action in this area serve as an accountability partner to how I say I want to live?