The insurance industry does not always have the best reputation. Relatively small companies holding huge amounts of wealth tend to make people nervous and uncomfortable, especially during economic recessions, and with companies given the same rights as individuals, there is naturally a public backlash against powerful companies.
Despite the fact that amassing wealth is by no means illegal (if it is done legally of course), the mere fact that there are people who are still prosperous financially when so many are suffering makes any company an easy scapegoat.
But even with an image issue that can easily dictate the profits and losses until the recession blows over, the way that the insurance industry has been constructed to work for the public good.
Insurance companies make money when policies are written. This is when customers pay their premiums and companies get a small influx of capitol. But when customers make claims and companies have to pay these claims, insurance companies lose money. So it is in an insurance company's best interest to prevent accidents that would cause customers to submit claims.
Therefore, insurance companies and those who promote public health and safety make for a natural alliance because it is in both parties' best interest to keep the public safe.
The goal of public health, as an entity of the government, is obviously to keep the public as safe as possible. This goal is reflected in laws passed after years of testing and often a public outcry. For example the seatbelt law requires everyone in a car to wear a seatbelt and the no smoking in restaurants law was put in place to mitigate the effects of second-hand smoke, just to name a few.
The passing of these laws has had major benefits for all types of insurance companies. After the seatbelt law was passed, fewer people were seriously injured or died in car accidents meaning that insurance companies have to pay out less money.
The same principle works for the anti-smoking law and health insurance companies. Fewer instances of the type of cancer that smoking causes mean fewer bills for health insurers. Naturally, the health and safety of the general public benefit from these laws, but also for insurance.
Certainly these types of policies benefit insurance companies much more overtly than independent insurance agents, but in an industry that is so centered on reputation, showing the public that insurance is really on their side and profits off of the public's well-being and not their losses will only help every aspect of the business, including agents.
Post written by Tatyana Levin
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