"I can't believe we're paying to watch something we could see on TV for free! If you ask me, everyone in this theater is a big sucker!"
--- Homer Simpson
The quote above is near the beginning of The Simpsons Movie, which grossed an unexpected $74 million in its first weekend. That's impressive until you consider the production cost was $1 million more at $75 million.
Here's the puzzle. Why would so many people pay to see characters they can see for free? Why do we pay for bottled water when tap water or even filtered water is much cheaper? Since a $20 watch can tell the time accurately, why will people pay $100, $1,000 or even more?
People aren't rational. Here's the real question. Why are we so concerned about price when deciding which insurance product to offer our clients? Our clients aren't that concerned with other purchases. They even buy mutual funds with unusually high MERs (see Mutual Funds are Sold Not Bought Globe & Mail).
So why are we so concerned about the price. The perception is that insurance products are commodities --- like table salt. Even table salts differ. Ours is flavoured, certified and from France. That was worth the premium price.
So why can’t there be a premium in the insurance premiums?
Mini Movie Review
Watching The Simpsons animated in 3D on a huge IMAX screen a few years ago was a treat. In contrast, The Simpsons Movie is entertaining but not amazing. If you watched it on your tv, you'd be hard-pressed to tell it apart from the tv show (except for the length).