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With the exception of health and automobile policies, which are required in the U.S., many young Americans view insurance, whether it’s term-life or long-term disability, with the same suspicion as, say, volcano insurance. And in many cases, that suspicion is warranted — if you don’t have any dependents or a debt shared with a partner, why do you need some slimy insurance salesperson convincing you to buy life insurance?

But what about renters insurance, which many landlords require? Or pet insurance — which may seem frivolous, but anyone who’s had a pet with a serious illness or injury knows how expensive veterinarian bills can get. Then there’s long term disability, the least-talked about but perhaps most pertinent of these “non-essential” insurance policies. According to a Harvard study published in 2009, lost income due to illness was a contributor in 40.3% of all personal bankruptcies in the United States. And of those bankruptcies, 77.9% had some kind of health insurance.

That’s why Jennifer Fitzgerald and Francois de Lame founded PolicyGenius, an education-driven platform for buying insurance. Today, the Brooklyn-based company is launching Insurance Checkup, a tool that provides consumers with personalized advice and quotes from over thirty insurance sellers, acting as the 21st century replacement to the door-to-door insurance salesperson. Just like any other independent broker, when PolicyGenius successfully refers a customer it receives a commission from the insurance company.

Fitzgerald and de Lame came up with the idea while working at the Manhattan consulting firm McKinsey and Company. “We met on a project for an insurance company that was sort of struggling to reach a younger, more self-directed consumer,” de Lame said. “In the markets I grew up in South Africa and the UK, buying insurance online was pretty easy already and I was pretty amazed to find how difficult it was outside of auto insurance.”

PolicyGenius claims to give transparent, unbiased purchasing tips without pushing anything you don’t need. “If you talk to an insurance agent about life insurance,” Fitzgerald says, “they’ll try to sell it to you and they’ll try to sell you permanent life insurance which is like ten times as expensive. And for 90% of the people who need life insurance, they should just get basic term life which is like one-eighth of the monthly cost. So we only sell term life insurance and we’re very transparent why, even though we could make a lot more money if we tried to push permanent insurance on folks.”

That raises another question: Insurance firms have made huge profits for decades pushing products people don’t need. If Insurance Checkup is as fair as Fitzgerald and de Lame say, why would companies want to partner up with them?

“We’re bringing them consumers they’re not reaching,” Fitzgerald says. “The agent sales force, which is what insurance companies have relied on to sell insurance for decades is losing reach and relevance. The average age of a life insurance agent is 56 years old.” Furthermore, she adds, eight in ten households don’t even have a relationship with an insurance agent, so it’s less about replacing traditional salespeople and more about filling a void.

Insurance Checkup, which took about seven months to build, currently offers life insurance, renters insurance, and pet insurance. Long-term disability will follow a month after that. Having already struck partnerships with the top six pet insurance companies, numerous life insurance companies, and all seven long term disability insurers in the U.S., the next step is to convince consumers this is something they need — which will be no easy feat. One major component of its user acquisition strategy is content-based, with PolicyGenius bringing on former Consumerist senior editor Chris Walters to oversee the production of original articles. Of course, insurance isn’t exactly the sexiest topic so Fitzgerald and de Lame have also partnered with a video team to create shareable clips particularly focused on pet insurance. (Which I suppose is the most viral of the insurances?)

But with so many people still recovering from the recession, not to mention younger Americans still trying to kickstart their career, how big is the market for a product that, while potentially life-changing, is all about delayed gratification? Remember these are Millennials being marketed to, and insurance is the opposite of a product like Facebook which provides tiny endorphin incentives a hundred times a day.

To find out, PolicyGenius polled 1,000 adults and found that, unsurprisingly, insurance
was among the lowest-ranked financial priorities, behind saving for retirement, paying down debt, and sticking to a budget. That said, fifty-seven percent of respondents said they either don’t have the right amount of insurance or they don’t know. Twenty-eight percent said they “probably have less insurance than I need.” And of those twenty-eight percent, almost half said their last insurance experience was negative, meaning there’s an opportunity for a company like PolicyGenius to get the online user experience right.

“A lot of people get into the funnel in terms of thinking about insurance but they tend to drop off because the online experience isn’t great,” Fitzgerald says.”And it’s pretty fragmented right now — like you have to go one place for health, another place for life insurance, another place for renter’s insurance, so just by bringing convenience and an easy experience to it, we think it’s going to be a big part of the battle for young folks.”

 

[photo by Alexandre Normand]