What insurance is missing

Transparency. That’s what insurance is missing. Do you know exactly why your premium went up? I don’t, and I’m in the business. I know about general rate increases, and I know about the increase to my dwelling coverage every year as a function of inflation, but I have zero way of knowing or accounting for exactly why my premium went up the way that it did. And I can’t know for any of my clients, either. I find that irritating.

Somewhere there’s a computer that knows. It took the inputs it was supposed to, it performed the function it was programmed to, and it spit out a premium as a result. So where is that report about me and why can’t I see it?

My beef isn’t that I don’t think insurance premiums should go up, because I think that they should. I’ve seen the data and I get it. But I don’t buy the “trust me, we know what we’re doing” argument, and I don’t buy the “it’s proprietary” argument, and I don’t buy the “it’s too complicated” argument as to why/how those rates are calculated for my family.

I want to participate in the relationship I have with companies that provide me my important financial instruments. I expect it of my banking, of my investment advice, of my tax preparation, of my mortgage, and of my insurance/resilience financing. My interest is not to stand in judgement, it’s to understand the specific components of what I get in exchange for what I pay and then use that knowledge to contribute to mutual betterment. Can I behave differently to reduce my exposure and thus reduce the pressure on the insurance company, thereby contributing to lower premiums for me and the collective? Can I take an action today that will re-categorize me in a better light for rating or coverage eligibility? Which side of the relationship wouldn’t benefit from a shared understanding?

I see the current injustice as an imbalance of knowledge. Those who have it control it and don’t share it, when sharing it might give those on the consuming end of the relationship some opportunity to affect outcomes. Insurance companies that dole out passive advice about how to reduce losses are not as noble as those who might share more of the full story and give people like us something to do about it. Democratizing knowledge inspires behavior. Hoarding it does not.

Buying vs. being sold to

One of my fundamental frustrations with the insurance industry is that insurance companies make products they want to sell, but they don’t often make products people want to buy. On its worst days insurance is sold with jingles and “comedy”. On its best days insurance is sold listing out features of coverage written in the policies, on promising an ease of doing business, and on triggering your reaction to price sensitivities. Either way, it’s still about them coming at you with things they like about themselves. That doesn’t feel much different to me than those inflatable dancing men placed in front of mattress stores and car dealerships.

But what do you want to buy? Do you want to buy bundling? Do you want to buy discounts? Do you want to buy a “name your price” tool? Do you want to buy 15 minutes and 15%? Good grief. What if instead you shopped for things you’d actually want?

  • Would you buy their claims service handling?
  • Would you buy their reasonableness in reaching an agreed cost of repair with a contractor or body shop?
  • Would you buy their access to help on billing questions?
  • Would you buy their claim settlement options?
  • Would you buy their objective to stop paying for your loss at $X?
  • Would you buy their transparency on how they arrived at your premium rate?
  • Would you buy their forthrightness on policy coverage education?
  • Would you buy their investment in helping you prevent a loss?
  • Would you buy their loyalty in times of difficulty?
  • Would you buy their priority ranking of the policyholder?

For liberation, not fear

The mission of wealth defense and resilience is to create a path that loosens the grip on worry and concern. And the point of that is to make more space in the head and the heart to pursue better things in a better life.

So much of the risk/defense/insurance business maximizes results at the “just no negative” level which I’ve seen infect families’ way of thinking about important issues concerning resilience. There’s a malaise in the banality of checking all the boxes to ensure you have really good insurance and it perpetuates the focus on nothing but avoiding the bad. All I’ve seen that lead to is moat building and a protectionist mindset with no long-term intrinsic value. If the best you can do is get to “meh”, then the focus on why you’re doing it seems wrong to me.

Instead, I argue that paying attention to risk management and wealth defense is like doing your homework first so you can go play. And you should be playing. Playing at things that give you meaning and an alignment of your time/money with your values. So maybe in your defense planning it’d be good to ask, “How can the liberation of this worry be used to accomplish what good thing?”

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.