Benjamin Franklin once wrote that the only certainties in life are death and taxes. If he had lived in 2015, he might have added a third inevitable evil: insurance.
Virtually no responsible, self-sufficient adult in America can function without buying some form of insurance policy at some point in their life. Whether it is private medical insurance, "umbrella" fire and theft insurance for one's home or apartment, life insurance, vehicle or boat insurance (mandatory if you want to register an automobile or motorcycle), business interruption insurance, professional malpractice insurance, the list of available policies goes on and on...
The ostensible purpose of all insurance is to spread risk. That is, rather than take the risk that your new house might burn down and lose everything, you fork over a few thousand dollars a year, so that if such a horrendous calamity ensues, at least you can buy a new wardrobe.
It is virtually impossible to imagine an adult successfully prospering in our modern society, fully exposed to all attendant economic risks without insurance.
Driving a car into a tree or hitting a pedestrian can easily bankrupt anyone. Giving birth to a healthy baby in a public hospital without health insurance could now cost well over $10,000. That is not to even mention catastrophic illnesses.
Fortunately, ever present are private insurance companies, ready to sell you a blanket policy for a reasonable annual premium.
But how do these "necessary evils" brand themselves to differentiate themselves from one another in the marketplace? By credibly advertising that they will pay all reasonable claims without becoming adversarial? No, not exactly.
Through kitschy commercials, of course.
The GEICO gecko has become ubiquitous. The redheaded, apron-wearing Flo, as portrayed by actress Stephanie Courtney, has become a mainstay of television. Cavemen, babies, puppy dogs and talking pigs have all become iconic representatives of an industry that isn't otherwise very popular.
Data provider SNL Financial found Geico had spent about $994 million on advertising in 2011. That was fully 22 percent more than next-largest spender State Farm, even though State Farm’s ad spending grew at nearly three times the rate Geico’s did.
The goal is to grab the attention of consumers who would rather not think about insurance. Experts say most people only ponder policies when they have an accident, buy a new car, move, or renew their existing agreement, which usually happens twice a year, at most.
Today there are about 187 million insured privately owned vehicles on the road. Turnover is relatively low from year to year — 11% of consumers switch their policies while an additional 20% shop but don’t switch, according to J.D. Power. But that still means more than 20 million people are in the market each year.
But the insurance companies' advertising isn't winning many fans among existing customers.
Ask anyone who has had a claim for storm damage denied by their house insurance company. In New York, four U.S. Senators accused flood insurance companies of mishandling claims for Hurricane Sandy-related damage, by hiring engineering companies expressly to underestimate damage from that storm.
Or ask anyone who has had their doctors' bills denied, because a health insurance company has come up with a byzantine set of pre-notification rules that weren't adhered to strictly at 3 a.m. when their child had an asthma attack.
They will wish you good luck trying to collect from the carrier.
As soon as a claim is filed, some of these same insurance companies that were so cutely advertising their products with ice cream and puppy dogs will hire a team of savvy adjusters and professional litigators to nickel and dime a claimant to death.
But, for now at least, such negative reviews don't seem to be reaching consumers amid the din of talking lizards.