The fox and the stork

A Fox invited a Stork to dinner, at which the only fare provided was a large flat dish of soup. The Fox lapped it up with great relish, but the Stork with her long bill tried in vain to partake of the savoury broth. Her evident distress caused the sly Fox much amusement. But not long after the Stork invited him in turn, and set before him a pitcher with a long and narrow neck, into which she could get her bill with ease. Thus, while she enjoyed her dinner, the Fox sat by hungry and helpless, for it was impossible for him to reach the tempting contents of the vessel.

― Aesop

The above is one of Aesop’s most famous fables. The moral drawn is that the trickster must expect trickery in return and that the golden rule of conduct is for one to do to others what one would wish for oneself. The golden rule truly is timeless wisdom and is especially in focus in these turbulent times.

Now let’s try to apply and explore this rule in the world of insurance, the insurance industry being a perfect setting to research the application of the golden rule:

Treat others as you would like others to treat you.

Insurance obviously has two main counterparties - the Insurer and the Insured. The Insurer is the one that bears the risk transferred to him by the Insured, for an agreed price (premium). In case an unpredictable event (loss event) happens to the Insured, the Insurer agrees to compensate the Insured for that loss, all based on the terms and conditions agreed by both counterparties. Or so it is in theory. The reality (as always) is somewhat different.

First of all, the insurance sales process. According to studies, only 27% of consumers trust their Insurer. One of the main reasons for this is that the Insurers are not following the golden rule. It seems that there’s a constant tension looming over the industry reflecting in the thought that the Insurer is always trying to push some kind of an “additional product” to the consumer which he most likely doesn’t want or even need. Obviously pressure on the sales department is high, but would the Insurer like to be treated the same in its business transactions (reinsurance for example)?

But let’s say that everything is more or less fine as long as there are no unfortunate events. Both parties are satisfied to some extent, the Insurer obviously being more happy with the situation. But, when an unfortunate event actually occurs, the Insured is often angry at his counterparty in the insurance transaction. To him it seems that all of a sudden, the Insurer is using all kinds of trickery - complicated wordings, exclusions of almost everything, loss payable subject to this and that, stalling with claim processing and so on. Some Insurers seem to think that they are only in the business of collecting premiums and a loss event by their books is something that is frowned upon with disgust.

But what needs to be clear is that reimbursing a loss is an essential function of an Insurer, its founding pillar.

There are of course instances when the Insured is a fraud. A true headache for every Insurer. In this situation the Insured is using various trickery to cheat the Insurer for some money. And the Insured can get quite vile in his trickery. For example, an Insured once dug up the grave of somebody else, dressed this person in his clothes, put the body in his car, set it on fire and pushed it off a cliff. The goal was to fake his death so the beneficiary could collect on his life insurance policy.

Considering both parties are not really abiding by the golden rule, this causes a lot of issues and problems. Resources and huge amounts of energy are wasted on dealing with these kinds of problems. 

The solution is pretty simple - it is technology, digital transformation combined with empathy. 

Empathy should be seen more in the corporate world. Especially in these turbulent times. Empathy is also at the core of insurance - helping people in trouble. Restoring the industry to its roots with an empathic customer centric approach is key to the future of the insurance industry. Insurers should sometimes go beyond the actuarial calculations and tables and connect on a more deeper level with the client. They should be able to help a person in need. Because ultimately, this is exactly why the client bought the insurance policy in the first place.

A true enabler of this approach is technology, it enables simplifying insurance products and wordings and making them more transparent, educating and improving communication with clients, speeding up the loss settlement process and of course fighting frauds. Currently in the world, there are many insurtech startups working on each of the aforementioned issues. 

It is kind of ironic that technology, in this specific case, will enable a more humane approach. But this only proves the eternal robustness of the golden rule.

Some would argue, this is business, not charity, there’s no room for this soft approach. But, as with everything in life, the golden rule always prevails. Why? Because it is simply natural.

Nor can I be angry with my kinsman, nor hate him, for we are made for co-operation, like feet, like hands, like eyelids, like the rows of the upper and lower teeth. To act against one another then is contrary to nature; and it is acting against one another to be vexed and to turn away.

― Marcus Aurelius