How Important is Insurance?

In the March 28, 2025 edition of Carrier Management, the synopsis of a study by the Insurance Research Council stated that 33.4% of drivers were either uninsured or underinsured.

A 2022 survey by the American Property Casualty Insurance Association identified that the majority of homeowners have not even considered increasing their values, given building inflation. Another 2022 study by Cape Analytics identified that approximately 67% of homes are underinsured by an average of 22% (ask yourself what the coinsurance threshold is). A 2022 study by Hub identified that nearly 60% of home and auto consumers are concerned they do not have enough insurance (and they probably don’t).

A 2023 study by Hiscox concluded that 75% of small businesses do not possess sufficient insurance.

And if you think this so far is damning, there’s more:

Depending on the source referenced, 84% to 90% of the value of companies listed on the S&P is in intellectual property and brand reputation. For insurance distributors, like agencies, the percentage is even higher. And the insurance industry insures just over 0% of the value. Agents are in the insurance business, and their most valuable asset is uninsured data.

These numbers do not address huge deductibles and major exclusions. Maybe it is safe to say insurance is now purchased to comply with banks and governments, but it is not purchased as a risk management tool.

Which makes this hard market perplexing because if insurance companies cannot manage to make money not insuring a majority of corporate risk and likely not insuring the worst personal lines risks, and charging full price for underinsured property, how incompetently are carriers managed?

In auto insurance, with a third of drivers inadequately insured, agents should be emphasizing UM/UIM coverage as much, maybe more, than liability because a good probability exists that a correlation between drivers more likely to cause accidents being under or uninsured is high.

Given the large proportion of the economy that is now uninsured or underinsured, and the high price of insurance, which only exacerbates the problem, a legitimate question exists relative to whether the entire insurance industry needs to be rethought. Insurance is useless if it is unaffordable or unavailable.

We’re just inviting the government to solve the problem. This is especially problematic given that insurance companies made almost three times the normal profit in 2024. They’re making huge profits in this market while consumers cannot afford regular insurance, in some cases they are not offering property insurance, and carriers are not offering the coverages businesses truly need. At a minimum, the optics suck.

The encouraging part is I’m seeing some innovation that bypasses the regular carriers who have been coasting along, not really offering value, and not insuring what needs to be insured. Along with the consolidation of distributors, those carriers’ futures are limited.

Distributors too though have a limited future because who needs an agent that does not offer the applicable coverages (see my multiple articles on how few agencies use coverage checklists) even if available, much less if the insured cannot afford insurance or is simply too frustrated with the limited coverage available and decides to go naked and self-insure? There is not much commission in $0 premiums.

The entire industry needs to be re-engineered to provide value at a reasonable price. And if a reader wants to bring up nuclear verdicts and trial attorneys, I have two suggestions. First, finally decide to invest in higher quality lobbyists because the insurance industry’s lobbyists have largely been failures for the last 30 years. Look at the track record and the trial lawyers' success if you doubt me. If insurance lobbying was better, trial attorneys would not be achieving nuclear verdicts.

Second, quit insuring trial attorneys and offering judgment protection coverage so that you’re not trying to have your cake and eat it too.

The industry is walking dead in its current configuration. The opportunity to provide real value, the need to provide real value, and the consumers’ appetite for real value at affordable prices are higher than ever. If you have the desire to offer invovative solutions to fill this gaping void, let me know. I'd love the opportunity to help. I have the insights, tools, and data to help you achieve your goals.

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NOTE: The information provided herein is intended for educational and informational purposes only and it represents only the views of the authors. It is not a recommendation that a particular course of action be followed. Burand & Associates, LLC and Chris Burand assume, and will have, no responsibility for liability or damage which may result from the use of any of this information.

None of the materials in this article should be construed as offering legal advice, and the specific advice of legal counsel is recommended before acting on any matter discussed in this article. Regulated individuals/entities should also ensure that they comply with all applicable laws, rules, and regulations.