The state of the insurance industry’s reputation in 2025, in a word, is disastrous.
Last year, insurance claims exceeded $100 billion, and the biggest takeaways for most insurance consumers centered on:
- Coverage cancellations or non-renewals
- Lack of transparency due to complex policy language or fine-print legalese
- Denial of claims or complex processes complicating the recovery process
- Rising premiums, along with either limited or no coverage options available
- An education gap between what consumers think their policies cover versus actual coverages
This is not to say that last year's CAT events were the deciding factor in how consumers perceive the industry. There has been a decades-long process as insurance has increasingly undercut its reputation by continuing to commoditize itself, competing on price versus service. Last December’s murder of United Healthcare’s CEO and the resulting public swell of support for the alleged killer helped bring the broader insurance industry’s reputation into focus, both for the public and for insurance professionals.
Why the Bad Rep?
The way the insurance industry operates is hard for most consumers to understand.
Those who go direct believe they are getting better rates and coverage. However, most insurance policies are difficult to comprehend, and the buy-direct model can frequently expose insureds to increased risks because the focus—of the insured as well as the insurer—is on price, not service or comprehensive coverage. When a claim does occur, most policyholders only then realize they were underinsured or not covered at all.
However, even those who purchase their insurance products through the traditional means of agents and brokers can run into complicating and confusing factors that include:
- Lack of transparency on coverage and pricing
- Manual, time-consuming and duplicative application processes
- Limited or insufficient digital or self-service options
An understanding of the critical fundamentals of insurance is key to changing this perception. Consumers need to be informed on how premiums are calculated or why coverage fluctuates with certain policy changes. The first time most insureds learn of a change to their premium is during the renewal period. Even then, there is little explanation of why their costs have increased when coverage has stayed the same.
One factor that has helped to push consumers to the buy-direct model is the complexity of the insurance application process itself. Many agents still follow antiquated, paper- or PDF-based processes that require significant manual input of duplicative information and extensive supporting documentation. For entire generations of Americans who appreciate the click/buy/instant gratification model of ecommerce platforms, the old-fashioned insurance application process is anathema, which drives them to the buy-direct model at their peril. Even for insurance agencies that offer digital applications, many of their online platforms are limited or must be supplemented by some form of the traditional application model.
What Do Customers Want?
Consumers are looking for affordability and value, transparency, convenience and personalization.
I call the commoditization of insurance the Walmart effect. Consumers want reliable products at the lowest possible price. However, focusing exclusively on the lowest-possible insurance premium can expose consumers to significant risks and, potentially, much more devastating long-term costs. This is one of the key education issues the industry must undertake. Consumers must better understand the inherent value of their policies and that higher premiums are not a scam for insurers to make money, but rather a practice to ensure the consumer has the necessary coverage to avoid a potential claims disaster.
Transparency in insurance isn’t just about pricing—it’s about trust. When buyers clearly understand their policies, they see how coverage choices affect their premiums. A transparent application process shifts the focus from cost alone to the real value of coverage, helping insureds assess their risks more effectively. But true transparency extends beyond numbers. Consumers need to know exactly what they’re paying for and how deductible options affect them. To rebuild trust, the industry must simplify its language, cut the jargon, and ensure every policyholder can make informed decisions with confidence.
In terms of convenience, insurance simply must do better identifying opportunities to incorporate technology to elevate the consumer experience. Consumers expect on-demand quick policy quotes, minimal data input and rapid responses. This is the real-world experience for consumers when they go online to book appointments, select event or travel experiences, buy groceries, shop for cars and make dozens of other purchasing decisions from their smartphones or computers. They expect no less from insurance.
Insurtechs are driving innovation, equipping the insurance distribution channel with the tools to streamline purchasing and quickly adapt to changing consumer behavior. Beyond simplifying transactions, these technologies enable insurers to introduce new products faster and stay competitive in a rapidly evolving market.
Insurers that successfully deliver the personalization consumers expect will set themselves apart. They won’t just earn customer loyalty—they’ll gain the respect of industry professionals who recognize a better way to do business. But true personalization is no easy feat. AI and machine learning are valuable tools, but they’re only part of the equation. Insurers must invest time, resources and skilled personnel to fully understand their customers’ unique circumstances and risk portfolios. By providing tailored recommendations to mitigate risk, insurers can not only improve coverage but also help lower premiums, creating real value for policyholders.
What Is the Solution?
For many insureds, experienced independent insurance agents with a view to the future offer a first line of defense against the further commoditization of insurance. However, this requires a fundamental rethinking of the agent role.
Insurance will continue to be a relationship business. Agents as advisers is a model long discussed but executed haltingly over the years. This is where technology and the solutions offered by insurtechs can play a role. The facilitation of better matching experienced agents with risk-focused consumers, as we do at Freshquote, we hope is one step in the right direction to solving not only the industry’s reputation problem but also the business development and coverage challenges of agents and insureds, respectively.
Automation and digital enablement can reduce the friction in the quoting and buying process, both for consumers and agents. Properly applied, automation can easily collect data, obtain and evaluate quotes, and even bind and pay. This frees the agent to focus on the role of trusted adviser, giving them time to help consumers understand what is important from a coverage perspective. It also shifts the agent’s focus from the transaction to better understanding and helping to mitigate risk. Additionally, the agent can spend more time advising consumers on various events or trends that may impact their coverage or premiums.
Changing how we approach insurance — by insurers as well as those we insure — will help us all. For consumers, it means looking beyond premium, seeing insurance as a service and protective shield against adverse events and experiencing an easier, better-informed, and more convenient insurance purchase experience. For agents, it presents an opportunity to recast their roles, potentially expanding their books of business and establishing greater trust and partnership with their clients. It will also help to build back trust in one of the world’s most crucial industries at a time when its reputation is so significantly misunderstood and misrepresented.
