How To Ruin A Good Idea

A number of insurance companies are refunding a portion of customers’ auto payments during the COVID-19 lockdown, which is a smart and fair gesture.

Unfortunately, they’ve ruined it with marketing.

The gesture didn’t start out so lily-white, either. Fewer people on the roads means fewer accidents, so the insurance companies are looking at a windfall in profits during a time when most other businesses will see a shortfall. The California insurance commissioner actually ordered some sort of customer financial relief.

So, the refunds had mercenary PR benefits for the companies in hopes of cushioning their successes in a time of failures. Got it. Welcome to the real world. That doesn’t make the gesture wholly illegitimate.

That task was reserved for the marketers to deliver.

I’ve checked the websites of most of the top insurance companies, and none of them are telling the truth; instead, they’re spinning the effort as if it were an entirely charitable gesture. State Farm has even branded it, calling it the “Good Neighbor Relief Program,” and is running TV ads touting its largesse.

This spin literally dares us to ignore the facts that insurance companies aren’t in the business of giving away anything, and that there’s usually a catch in the mouse print and, instead, somehow embrace a different reality in which 1) this time is different, somehow, and 2) there aren’t any gotchas in the details.

At least American Family noted the reality of fewer drivers meaning less accidents (Disclosure: I am a customer), but still introduced its “unprecedented action” to “help our customers” and “return the savings to you” when it’s keeping some of the cash (and benefiting from all of the savings in reduced processing) for itself.

I can imagine a different approach to the programs that would have been far more credible and beneficial to everyone involved:

First, lead with the truth — say something like we’re bathing in cash that we didn’t earn so we’re giving it back — and go the extra mile to disclose the math behind what’s being paid out. With such transparency, the insurers could have given customers options, like extended policies for a few extra months at no charge (or some other way to spend the benefit) vs. getting a check in the mail. At least it wouldn’t have felt like they were doing us a favor (which they’re not).

If telling the truth is too scary to insurers, at least they could have skipped all of the self-congratulatory nonsense and simply said “here ya go.”

Second, speaking of congratulatory nonsense, how about skipping the branding and TV commercials and just sending people money? I could see such an approach prompting a lot of questions and social media currency, as people used their own voices to share and promote the program. Why does every act of goodwill need to be marketed (and this isn’t just goodwill)?

Third, what about the day after the pandemic when people are getting in their cars and being 1) anxious overall, 2) potentially distracted, and 3) rusty behind the wheel? Aren’t there some actuaries or AI bots crunching those numbers, and might they be worse than they were when lots of people stopped commuting?

The insurance companies could have addressed this issue head-on as well, linking its payments to some educational or other activities to prepare people for that eventuality.

Similarly, what if a good number of folks never go back to physical commuting even when they’re allowed to do so? Couldn’t the companies have used the refund as a prompt for starting conversations about reevaluating their policies and make first-ever adjustments halfway through policy periods?

Encouraging safe travel should be paramount, which might mean some folks rarely getting behind the wheel again. Shouldn’t insurance companies be thinking about preparing for the impact that’ll have on their balance sheets?

Ultimately, the insurance refunds were nice — we received $50/ea. for our two cars — but the amount wasn’t anywhere near as important as the gesture itself.

Sending money back to customers was a good idea. It’s too bad marketers ruined it.

By Jonathan Salem Baskin

I'm a writer, musician, and science junkie.

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