Why the public needs to better understand insurance
Risk management through insurance is built into our society and culture, but insurance education is not.
Your car is insured. Businesses are insured. If you’re a homeowner, you’ve got home insurance; if you’re a renter, you may have renter’s insurance. Risk management through insurance is built into our society and culture, but insurance education is not.
A survey by the National Association of Insurance Commissioners found that only one-third of those surveyed believed they have a good understanding of their insurance policies.
Here’s an example: another recent survey showed that nearly half (49.4%) of all homeowners surveyed believe that the amount of home insurance coverage they need is based on their home’s market value when actually, home insurance coverage should be based on how much it would cost to rebuild the home in case of catastrophe. The disparity between market value and rebuild cost can cause either underinsurance (not enough protection) or over-insurance (more protection than needed).
Not knowing what a policy covers allows for costly incorrect assumptions and can lead to the denial of claims. Did you know that a standard homeowner’s policy doesn’t cover flood damage/? Earthquake damage isn’t covered, either.
The effects of climate change make it even more important for consumers to better understand property and casualty insurance. In a commentary on PropertyCasualty360, Preston Nanney posits that climate change will bring enormous changes to the entire P&C insurance industry. He states, “The insurance industry may not be adequately prepared for climate change today, but that can change. It must if we want our industry to endure.”
According to a study by Sharon Tennyson for the Networks Financial Institute, “Consumers generally know more about health and life insurance than about auto and property insurance.”
Most consumers have a minimal understanding of the difference between property insurance, hazard insurance, casualty insurance, flood insurance, and earthquake insurance.
So even if you’re not in the insurance industry, it can save you money (and heartache) to improve your insurance literacy! To that end, ALM and Miami Dade College offer a new insurance literacy course, Insurance Careers 101: Going Beyond Jake, Flo, and the Gecko. In the course, you’ll collaborate on assessing an actual insurance claim, learning the part that each role – risk manager, underwriter, actuary, and claims examiner – plays when a policyholder has a claim.
Suppose an insurance career may be in your future. In that case, you’ll also meet with, interview, and be mentored by insurance professionals as you learn more about writing cover letters, building resumes, and applying for jobs in the industry.
SIGN UP NOW ALM INSURANCE INDUSTRY LITERACY PROGRAM CAREERS IN INSURANCE INDUSTRY 101: BEYOND JACK, FLO AND THE GECKO