About 40 years ago my dad once said you can go insurance broke. He said that in time when the median price for a new house was under $70,000. It was time when a mid-size sedan did not need “gap” insurance to cover the immediate drop in value of a new car when its tires hit the street. It was a prehistoric era when a doctor’s visit could be paid in cash and HMOs were just crawling out of the primordial ooze that would eventually evolve into a renaissance of what we now know as affordable healthcare.
In 2014 insurance companies spent a shade over $5 billion in advertising trying to convince customers to buy products that in most cases are mandated by law as in automobile insurance or workers’ compensation insurance. In most states rates are controlled and overseen by an insurance commissioner. In some cases this is an elected official of the consumer for the consumer. Elected or appointed he is the Kommissar for the insurance industry.
This $5 billion is a paltry sum compared to the $16 billion that car companies spend in a market unregulated by a commission. It is less than the nearly $8 billion the Personal Care Products industry spends to convince consumers which $15 four-bladed transforming shaver is the best.
Advertising creates an image of a company and draws customers to its products like Sir Speedy and Mister Peanut. For $5 billion the insurance industry has created some interesting characters to represent them. There is a talking lizard with a British accent. Nothing embodies insurance more than a talking lizard. When it comes to selling there is nothing more convincing than a talking, beguiling reptile to move a product. Just ask Eve.
And what kind of message is being sent with those poor, luckless cave men trying to be hip. Neanderthals are constantly getting a bad rap. Life was not so simple for them back in the Stone Age either. And what kind of comment is being made about the insurance buying consumer? Are we Homosapians or just sophisticated Cro-Magnon men with over large deductibles ?
Then there is the Abdominal Snowman chucking a car-crushing snowball, a fictional accident waiting to happen. Who needs a 500 pound snowball? Golf-ball size hail is a car killer. And everybody loves babies. Nothing makes me want to buy insurance more then giant, diaper wearing, crying baby that really is a car. This commercial has to be an outgrowth of the old TV sitcom “My Mother the Car.” This was a show that ran in 1965 that TV Guide said in 2002 was the second worst show of all time.
Then there is mayhem everywhere: The one Stooge of the insurance world. Exploding water heaters and gas grills to recalculating map directions, it is no wonder the cavemen packed it up for a more simpler time. And who can forget white-clad gal who makes buying insurance look as easy as fighting off the mass hordes at a Super Wal-Mart on payday.
And let us not forget the nifty slogans of good hands and good neighbors. Smart consumers may want to forgo their 15 minutes of fame and use it to save money on insurance because as my old man once said “you can go insurance broke.” And if you are not there yet just check out what a COBRA payment would be.
I am not sure of the economics of all this. Is it supply and demand or demand and supply? Is it because there is no snap in the price elasticity of demand? Or maybe when it comes to insurance there is no inferior good. Who knows, but there seems to be a correlation to a product’s need to how absurd its commercials are. People have to buy most insurance — a captive consumer — so let’s make it as entertaining and ridiculous as possible.