These days, you can get insured for almost anything and the internet has helped fashion a highly transparent and competitive market place for domestic and global insurers. Some insurance is required by law such as car insurance or medical insurance in certain jurisdictions. 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. Then there is a third class of insurance aimed mainly at consumers that is highly specialised such as pet insurance, wedding insurance or certain types of extreme sports insurance. On the high street or online, companies set their policy prices and excesses at varying rates depending on various factors. There is also a secondary market where insurance brokers sell their services who act as agents buying products at the behest of their corporate or consumer clients. Underwriters are another group of agents operating in the insurance industry.
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 assess the drivers accident record. In medical insurance, another example might be where the patients medical records are examined. The internet is certainly helping helps the insurance marke remain competitive and transparent but some customers are even now finding themselves uninsured when it really matters. Extreme winter sports insurance demonstrates this well. The industry believes that more than 50% of travelers to ski resorts have no insurance and although the other half do, less than a quarter of them are actually insured for skiing and snowboarding which are classed by almost all insurance firms 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 simply not the case at most 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 introduction of price comparison sites. Car insurance is required by law so everyone must purchase it. This puts price up there as 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 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 insurance online for the best bargain. Another questionable 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.