The world wide web has changed the way we purchase insurance forever
These days, you can get insured for almost anything and the web has created a highly transparent and competitive market place for insurance providers. The law requires that customers purchase certain types of insurance such as car insurance or medical insurance in certain jurisdictions. Other insurance although optional in law is seen by most as a ‘must have’ such as travel insurance or insurance for corporate property and business assets. There is then another type of product focused mainly on the consumer market which is more specialised such as pet policies, wedding insurance or certain types of extreme sports insurance. On the high street or online, companies offer varying rates and excesses according to many different variables. A secondary market also exists for customers to buy the services of insurance brokers who shop around for products at the behest of their consumer or corporate clients. Another service offered primarily through agents is underwriting.
This is where the risks of any given insurance venture are calculated and the underwriter determines the premium and cost of the insurance or whether or not insurance should be offered at all. An example from car insurance would be to assess in detail the driving history of the customer. Another example might be medical insurance where the patient’s sickness record is examined. The introduction of the internet greatly helps the insurance market remain competitive and transparent but some customers are even now finding themselves uninsured in times of emergency. Winter sports insurance is an excellent example of this. It is reported that more than half of holidaymakers to winter skiing destinations travel without insurance and although the other half do, less than a quarter of them are actually covered for skiing and snowboarding which are classified by almost all insurance firms as ‘extreme sports’ and not included in their basic cover. Most travelers to Europe also think that their E111 is adequate to get them treatment but this is simply not the case in most resorts. Another interesting example of how the market is changing is the relentless price war between opposing auto insurance brokers that has been largely facilitated by the mass uptake and use of price comparison sites. We have to buy car insurance as a matter of law so It simply must be bought by every individual with a car. This puts price up there as the chief competitive factor.
A recent negative example in the sector was when payment protection insurance policies (PPI’s) were discovered by the FSA to be negligent drafted or having been missold to many customers. This has generated a storm of legal claims against insurers or certain banks and firms being created for the single purpose of acting as legal assistants so that customers can claim back any PPI that might have been missold to them. Compare insurance on the net for the greatest deal. A further dubious insurance product is identity theft insurance that claims to refund the subject for losses on account of cyber fraud or identity theft. However most customers do not realise that the bank is more than likely liable for such acts.
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