Embracing Innovation for Oklahoma Consumers
By Oklahoma Insurance Commissioner Glen Mulready
For the past two years, the insurance industry and the regulatory community have worked tirelessly to protect consumers during the COVID-19 pandemic. Together, we learned to pivot, adapt and grow. Customer behavior is rapidly changing, and more businesses are looking for different ways to protect their assets. The insurance industry has responded by finding creative ways to serve customers and meet their needs. At the Oklahoma Insurance Department (OID), we highly encourage this. I am a firm believer in a competitive free market. I also believe that change encourages innovation and efficiency.
An example of this creative response is Degree Insurance, a new startup and a recently approved Oklahoma insurer. The company has introduced a new policy to make investing in a college degree a lower risk. As a parent of three college students myself, I know firsthand the cost of attending college can be a heavy burden, especially when there’s no salary guarantee post-graduation. In addition, many young graduates are worried about the return on investment (ROI) as their degree does not promise better jobs and bigger earnings in the future.
According to the Federal Reserve, 55% of bachelor’s degree recipients took out student loans. The average debt at graduation from four-year public and private nonprofit colleges was $28,400 in 2020. Today, Americans owe nearly $1.75 trillion in student loan debt. Many students, including my kids, come to college in hopes of finding a niche where they can excel in a specific field of interest, graduating with a degree, and finding a well-paying job.
These student loan debt statistics show that higher education is the largest uninsured investment most people ever make without any guaranteed ROI. The ONLY thing that is guaranteed is how much students will pay for their degree. This unique concept can help ensure that ROI and ease the financial burden for many students. I believe an innovation like this will help colleges attract and retain more students, improve college graduation rates, and lower unemployment rates.
This insurance policy guarantees that upon graduation, students will earn an income for their first five years at the average for academic fields based on actuarial information. If they do not make as much as the policy guarantees in those five years post-graduation, the company will pay off the difference between the guaranteed amount and the actual salary amount. For almost every big decision people make in their lives, they have insurance — family, house, car —so why not college degrees?
With so much changing in the world and the surge of new risks, now is the time for our industry to evolve to cope with inevitable changes and provide creative solutions to satisfy different customer needs with the appropriate resources. To keep our Oklahoma insurance market competitive, I believe the insurance industry needs to embrace new technology and innovation to make sure risk is understood and consumers are protected. With new cutting-edge tools like this, insurers will be able to provide the level of service customers expect and stay one step ahead of whatever comes next in this ever-evolving industry.