Consumers are becoming more and more clued up about their insurance
Thursday, January 26th, 2012 | Development
These days, you can get insured for almost anything and the world wide web has helped fashion a highly transparent and competitive market place for insurance providers. Some insurance is required by law such as car insurance or medical insurance in many countries. Other insurance not required by law 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. There is then another type of product aimed with the needs of consumers in mind which is more specialised such as pet policies, wedding insurance or insurance for extreme sports such as skiing. On the high street or online, businesses tender different excesses and policy prices dependant on many different things. There also exists a secondary market for the services of insurance brokers who act as agents buying products at the request of their corporate or consumer 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 premium and cost of the insurance or whether the agreement is viable at all. An example from car insurance would be to assess in detail the driving history of the customer. In medical insurance, another example might be where the patients sickness record is examined. The mass take-up of the internet definitely helps the insurance sector maintain its competitiveness and transparency but some customers are even now finding themselves without cover when they most need it. Extreme winter sports insurance demonstrates this well. The industry believes that more than 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 in most resorts. Another interesting example of The adaptation of the insurance sector is the furious competition on price between rival auto insurance companies that has been mainly facilitated by the introduction 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.
An example of negative activity in the insurance sector was when payment protection insurance policies (PPI’s) were uncovered by the FSA to be completely worthless or having been fraudulently sold to customers. This has generated a storm of legal claims against insurers or certain banks and firms actually being set up for the single purpose of acting as legal assistants so that customers can claim back any PPI that is covered by the FSA’s investigations. Compare travel insurance on the net to give the best bargain. A further dubious insurance product is internet security insurance that promises to reimburse the customer for any loss as a result of cyber fraud or identity theft. However most customers do not realise that the bank is in most sets of circumstances liable for such acts.