Should You Buy Insurance from Your Own Company?

by Elizabeth End, FCAS

For those of you employed by insurance companies offering personal lines products, you probably have the opportunity to buy insurance from your own company. When I started working, my initial thought was, “Of course I’m going to buy insurance from the company I work for. I’m going to take advantage of the employee discount!” If offered, an employee discount can be a significant reason to purchase insurance from your company, but there are other considerations when making this decision. Before committing to using your company as your insurer, think about the pros and cons.

Know What You Need

Whenever anyone buys insurance, regardless of whether they work for an insurance company or not, the most important step should be assessing what type of coverage you want and need. Your insurance preferences may not align with your employer’s product offerings. Not every company offers pet insurance or earthquake insurance. Don’t go uninsured just because your company doesn’t offer a certain product. Find a company that meets your needs.   

Just as your company might not be a good fit for you, you might not be the right customer for your company! Perhaps your company targets drivers of a certain age for their auto insurance and you are not in that age range. You may be able to get a better price with a different company. Try to figure out which company provides the best alignment with your budget.

Taking the Plunge

If your own insurance company does seem like a good fit, there are numerous benefits to having your policy with your company. As mentioned above, employee discounts may be a perk of the job, and it is great when you can utilize all your benefits. Additionally, buying a policy from your company can be very convenient. The company may have agents readily available to help walk you through the application process and assess your needs. This may be able to be done face-to-face during the work day or at lunch. Besides the agent, you may know people in other departments such as underwriting, claims, billing or pricing who you can contact directly with questions regarding your policy or how a process works. There will be more transparency on how your policy is priced because you may work on pricing the territory where you live or know some actuarial staff who are.   

Having insurance through your own company will help you understand and know the company better. It sends a message to others that you believe in your company and its products and promises.

Lastly, if you are a good risk, your loss experience (or lack thereof) will improve your company’s results and perhaps contribute to a bigger year-end bonus!

Buyer Beware

The downsides of buying insurance from your own company arise from events, that while infrequent, could strain relationships at work. First, there is the chance that you have a claim that does not progress as you think it should. Perhaps it even gets denied. Maybe you get a lawyer involved. It could turn messy and uncomfortable for multiple parties. Your contact in claims may start avoiding you at lunch. You may feel frustrated and start questioning whether you want to continue working for this company. Things could spiral. Also, that year-end bonus check might be smaller because of you.   

Purchasing insurance from a different company gives you a degree of privacy. You may not want anyone at your company knowing that when your car was stolen, you had left the keys in the car. (Morale hazard, anyone?)   

You may also want to purchase insurance outside your company based on your role. If you are setting territory base rates for your own neighborhood, some might perceive that as a conflict of interest. Although our Code of Conduct helps to ensure that actuaries are not setting rates unfairly or discriminatorily, separating yourself from the situation by purchasing insurance outside of your company reduces the chances of anyone thinking there was impropriety or bias in your decision-making for that territory.   

Lastly, in having a relationship with another company, you will learn about that company and their customer service. You may be able to glean some competitive insights that you think your own company should mimic.

You Have Options

With all this to consider, if you are struggling with whether you should buy insurance from your own company or not, don’t forget that you can have the best of both worlds. You can buy a property policy from your company and an auto policy with a different company, or vice versa!