The niche insurance market: the benefit of specializing

Those looking for rides have Uber. People that need a room for a few nights have AirBnB. Tired of email? Texting, tweeting or shooting a Facebook message are now other, more direction options of communication.

There is so much disruption in every industry…except insurance. And what’s the need for it? People pay their premiums in exchange for an “if all fails” solution and some peace of mind. Whether it be car insurance, homeowners or renters insurance or life and medical insurance, people know who to call when they are looking to prepare themselves for the worst.

But what few people tap into is the specialized insurance market. We all hear about celebrities insuring their body parts for millions but what about normal, everyday people? Is there are a market for the “Average Joe” to get insurance for something unusual?

The answer is, of course, yes. Understandably so, however, many  providers like to stay away from offering something too specific. That’s why we’re going to discuss the benefits of specializing, especially in insurance.

What is specialized insurance

Specialized insurance is designed for specific – and in some cases exceptionally unusual – circumstances. It’s coverage for the completely unexpected. And one of the biggest buyers of specialized insurance are business owners. They need coverage to secure themselves against the inherent risks in their distinct industries. 

There are many different levels of specialized insurance, and the range is vast. Many companies offer their version of specialized insurance in the form of tailored plans. Whether it be through healthcare, business manufacturing, professional liability or marine insurance, whatever your clients need to feel secure you can now provide.

In terms of the advantage of specialized, we’ve come up with two main ones. Your customers benefit from specialization because it gives them added security in circumstances when they are most vulnerable. For your business, the main reason specialization is important is because it elevates you above your competition.

Before we explain more on that, let’s first start with how specialized insurance can benefit your customer.

The benefits of specialized insurance for your customer

As we mentioned before, the biggest market for soliciting specialized insurance is going to be business owners. Jumping into the deep end and becoming an entrepreneur is quite a daunting decision. There are offices to consider, employee health and safety, assumed risk, and unexpected losses. Not to mention very unusual circumstances like accidents, fires or broken material items.

Going into business for yourself is risky, and there are numerous security blankets your potential clients can use to cover themselves. But what about the more uncommon situations associated with job security? I’m talking about non-office related things that are vital to a company’s success. Need an example?

Security for your clients in all scenarios

In 2008, a Dutch wine taster with a vineyard in Bordeaux insured his nose for $8 million. Why? Because it’s his livelihood. As are actress America Ferrera’s teeth. Aquafresh White Trays insured Ferrera’s teeth for $10 million after she started working with them. There’s also the coffee maker that insured his tongue for $3 million and the food critic that insured his taste buds for $300,000.

As odd as all of these sound, take a moment to consider their other option. They could have not insured their teeth, taste buds or tongue, but what if the horrific happened? Let’s look at this another way. Let’s say you make your living as a calligrapher and you break your hand in a car accident. Wouldn’t you feel a little bit better knowing you had something to fall back on when you were injured?

Job security isn’t the only brand of specialized insurance. You’ve heard of travel insurance in case things get lost, stolen or cancelled. In 2010, Thailand took that up a notch. Their government offered riot insurance for up to $10,000 to combat the growing worry tourists had surrounding visiting the country. That insurance covered any loss or damage resulting from the political upheavals.

But riot or travel insurance isn’t the only thing humans have to worry about. In fact, there are many, many other things resting much closer to home that can cause major problems. Luckily, there’s insurance for that as well.

From the unfortunate to the implausible

For the risk averse, planning a wedding can be a frustrating and anxiety-inducing experience. You control every little detail leading up to the big day, yet you don’t truly know what’s going to happen when it arrives. Even worse, there may be a concern by one or both parties if they will indeed make it down the aisle. Fortunately for everyone involved, you can cover your potential losses.

WedSafe®, a wedding insurance company, offers two types of very specific plans: one for a cancelled or rescheduled wedding and one for any damages that may happen during the wedding. There’s also insurance for the unexpected birth of a child…in addition to the one you already planned for. That’s right, you can be insured for twins as long as you take the policy out before the eleventh week of the pregnancy.

And in the unusual, unexpected and implausible category, there is insurance for an other-worldly encounter. In 2001, a man insured himself against abduction, impregnation and consumption by aliens. A year later in 2002, the Royal Falcon Hotel in Lowestoft, UK insured its staff and customers against death and disability by poltergeist or other abnormal phenomena. Both of those policies had a £1 million payout.

Although some of the policies mentioned above are highly unlikely – and, to some, outlandish – people still got them. You can’t put a price on a human being’s peace of mind even in an exceedingly bizarre and less-than-likely situation.

But consumers aren’t the only ones who can find peace of mind and benefit from specialized insurance. Companies looking to make a name for themselves can find the specialized insurance market a welcome place to build their brands. This brings us to the second big benefit of going niche.

The benefits of specialized insurance for your brand

What is the first thing you think of when you hear the word Google? How about Toyota? Or Disney? McDonald’s? If I had to guess, your answers were an internet search, cars, amusement park and burgers respectively (or something similar to those answers).

That is significant because all of these companies have managed to do the thing that the majority of green entrepreneurs are trying to achieve: brand recognition. They’ve created a discernable brand through a very specific product offering and – in the process – many of them have cornered the market to the point where the product is their company’s name (how often do you “Google” something instead of saying “searching”? Daily? Case and point.).

Think Spanx or Coca-cola. Any woman with a body shaper is most likely calling them Spanx, whether that’s who made them or not. And if you’ve spent time in the American south, all of the sodas are called “Coke.”

Let’s go back to WedSafe®. They not only offer insurance for the very unfortunate possibility of cancelled nuptials, but also less invasive problems. Bad weather? Venue fall through? A vendor drop out? With one plan, they cover anything that could go wrong – even something benign like misplaced wedding gifts or lost photographs.

What makes WedSafe smart is that they carved out their niche, and then diversified within that niche. They know how stressful that special day can be for the bride, groom and their families, so they made themselves into a one-stop shop. Now? They have a solid social media following and hundreds of testimonials from happy customers. The specialized and have benefited greatly from doing so.

Specializing in something – especially in this industry – gives you not only a leg up on the competition, but also an opportunity to niche your way to success. People respect brands that specialize.

Potential boost in traffic

Taco Bell’s customers have developed a cult like brand loyalty for their favorite fast-food tacos and quesadillas. They developed brilliant advertising (remember “Yo quiero Taco Bell”?) throughout the years yet their shrewdest endeavor involved insurance.   

Back in 2001, the Mir space station was making its way back to earth and was expected to crash into the Pacific Ocean somewhere off the coast of Australia. If you’re not a scientist, that news can be pretty boring. But Taco Bell didn’t just make it interesting, they made it an event worth anticipating.

The company created a 40 foot by 40 foot floating target with a “Bell: for a bullseye. If the core of the space station hit that target, everyone in the United States got free tacos. What does this have to do with insurance? In anticipation of the potential surge in production, Taco Bell purchased an insurance policy to cover the anticipated cost of the free taco redemption. In addition, they posted a minute-by-minute countdown on their website so viewers could track Mir’s movements (as well as their chances of getting a free taco).

What Taco Bell did was a gimmick, but it was one that led to a lot of publicity and even more feet in their establishment. And the insurance industry should take note. Whatever you do to get people to know your name can be helpful, but the product you’re providing must be likeable, reliable and easy to get behind.

For the novice business owner or the experienced insurance provider, offering specialized insurance is a great way to infuse something new into a often-stale industry. The need is clearly there and the advantages will soon outweigh the disadvantages. Give specialized insurance a try both for your customers and your bottom line.