There is a lot of change coming to the insurance industry. Between a new presidential agenda and an over-digitization of technology, the insurance industry is in for a transformation. Here are three ways the insurance industry is already making an about-face.
Trumpcare (Possible Changes that Matter to you)
It is hard to anticipate the eventual form of the changes coming to healthcare but there are some “theories” that are considered fairly plausible at this point. Here are some likely changes:
- Tax Credits: Refundable tax credits, based on age and income, will help a person buy insurance, if they do not have it through their job. It may be something in this neighborhood: those under 30 get $2,000 a year; over 60s can claim $4,000.
- No more limits on healthcare savings: The cap that Obamacare placed on the allowable amount of savings in health care savings accounts may be eliminated in Trump’s plan.
- Fines Going Away: The plan is to no longer penalize those who do not have health insurance with a fine. Under Trumpcare, the fines may go away but insurance companies may be able to charge a 30 per cent premium if coverage was allowed to lapse for 63 days or more.
- Insurers Can Set Their Own Prices: Insurance companies will have more freedom to set their own prices. An example of how this may change the market is that older people might pay five times the amount charged to younger consumers. The limit was set at three times the price under Obamacare.
Changes in Shopping for Insurance
More and more consumers are buying insurance online. A study in 2016 revealed that for automobile insurance, having a local agent or broker (which used to be the #1 driver of customer satisfaction) is no longer considered that important. The amount of new auto insurance placed by local brokers has been in steady decline.
The study points out that the that 70% use the internet to research and compare insurance policies and more than 50% have received online quotes.
Does the future hold something akin to “a Trivago” for those shopping for insurance?
Ease of Switching Your Policy and Fast Claims
If you can find a new homeowners policy on your Android or iPhone and switch in a matter of minutes, would that help remove some of your “policy inertia”? The answer is yes for many people. If you throw in a lot of other promises as the startup Lemonade (www.lemonade.com) then perhaps this is even more enticing.
Lemonade (yes, an odd name for an insurance company) provides a long list of companies that consumers left when switching to a homeowners policy with Lemonade. Among the jilted insurers were Assurant, Allstate, Farmers, Progressive, State Farm, Travelers, Liberty Mutual, and Geico.
Their website makes some bold claims: “Lemonade reverses the traditional insurance model. We treat the premiums you pay as if it’s your money, not ours… everything becomes simple and transparent. We take a flat fee, pay claims super fast, and give back what’s left to causes you care about.”
Whether or not there will truly be anything “left”, as they put it, remains to be seen. Some have criticized the company as “thinly capitalized” but others are very optimistic and some notable investors have joined the bandwagon.
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