Insurance is available for almost everything these days and the internet has helped fashion a highly transparent and competitive market place for domestic and global insurers. You are required by law to have certain insurance such as car insurance or medical insurance in certain jurisdictions. Other insurance although not legally required is seen by most as a ‘must have’ such as travel insurance or insurance for a person’s business interests or property belonging to their business. Then there is a third class of insurance aimed with the needs of consumers in mind that is highly 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 dependant on many different things. There also exists a secondary market for the services of insurance brokers who trawl the market for products at the request of their consumer or corporate clients. Another agency service in the insurance industry is underwriting.
Underwriting is basically where the risk to the insurer and other risks are calculated and the underwriter determines the premium and cost of the insurance or whether to insure 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 patients medical records are examined. The internet is certainly helping helps the insurance marke maintain its competitiveness and transparency but many customers are still finding themselves without cover when they most need it. A good example of this is winter sports insurance. The industry believes that over half of travelers to ski resorts have no insurance and although the other half do, only a quarter of them are in fact insured for skiing and snowboarding which are classified by most insurers as ‘extreme sports’ and excluded from their plans. Most travelers to Europe also think that their E111 will cover them for treatment but this is not the case at most resorts. Another recent example of how the market is changing is the relentless price war between rival auto insurance brokers that has been in the main facilitated by the mass uptake and use of price comparison sites. Car insurance is required by law so It simply must be bought by every individual with a car. This makes price the primary competitive factor.
A recent example of a failure in the insurance sector was when payment protection insurance policies (PPI’s) were discovered by the FSA to be either useless or having been fraudulently sold to customers. 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 web to give the best bargain. Another questionable product is identity theft insurance that promises to reimburse the customer for any loss as a result of cyber fraud or identity theft. However many people are unaware that the bank is in almost all instances liable for such acts.