Consumers are becoming increasingly on the ball regarding their insurance policies
Insurance covers almost everything these days and the internet has created a highly transparent and competitive market place for insurer services. Some insurance is required by law such as car insurance or medical insurance in some countries. Other insurance not required by 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 aimed mainly at consumers that is highly specialised such as pet policies, wedding insurance or Insurance for adventure holidays or extreme sports. On the high street or online, companies offer varying rates and excesses dependant on many different things. There is also a secondary market where insurance brokers sell their services who act as agents buying products at the request of their consumer or corporate clients. Another service offered primarily through agents is underwriting.
Underwriting is basically where the risk to the insurer and other risks are calculated and the underwriter determines the correct pricing arrangement for the insurance services or whether or not insurance should be offered at all. To take the example of car insurance, the underwriter would take a detailed look at a drivers accident record. In medical insurance, another example might be where the patients health is taken into account. The mass take-up of the internet definitely helps the insurance marke maintain its competitiveness and transparency but some customers are even now finding themselves uninsured in times of emergency. Extreme winter sports insurance demonstrates this well. The industry believes that over 50% of holidaymakers to winter skiing destinations travel without insurance and although the other half do, only a quarter of them are actually insured for skiing and snowboarding which are categorised by many providers as ‘extreme sports’ and not included in their basic cover. In the main, European travellers also think that their E111 will cover them for treatment but this is not true for many resorts. A very recent example of how the market is changing is the relentless price war between rival auto insurance companies that has been mainly facilitated by the mass uptake and use of price comparison sites. In this country, we are legally obliged to have car insurance so It simply must be bought by every individual with a car. This makes price the primary competitive factor.
An example of negative activity in the insurance sector was when payment protection insurance policies (PPI’s) were discovered by the FSA to be completely worthless or having been fraudulently marketed. This has caused a storm of litigation from customers and firms being created for the single purpose of acting as agents by which customers can claim back any PPI that might have been missold to them. Compare travel insurance on the net to give the best bargain. Another questionable product is internet security insurance that claims to refund the subject for losses on account of cyber fraud or identity theft. However many people are unaware that the bank is in almost all instances liable for such acts.
