Customers are getting more and more clued up about their insurance

January 20th, 2012

Insurance covers almost everything these days and the internet 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 certain jurisdictions. Other insurance not required by law is viewed by most customers as a ‘must have’ such as travel insurance or insurance for corporate property and business assets. Then there is a third class of insurance aimed with the needs of consumers in mind which is more specialised such as pet insurance, wedding insurance or insurance for extreme sports such as skiing. Either in the high street or on the internet, companies offer varying rates and excesses according to many different variables. A secondary market also exists 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 decides what the insurer should charge for their services or whether the agreement is viable at all. To take the example of car insurance, the underwriter would assess the drivers accident record. Another example might be medical insurance where the patients sickness record is examined. The internet certainly helps the sector maintain its competitiveness and transparency but many customers are even now finding themselves uninsured when it really matters. A good example of this is winter sports insurance. It is reported that more than 50% of travelers to ski resorts travel without insurance and although the other half do, only a quarter of them are in fact covered for skiing and snowboarding which are categorised by most insurers as ‘extreme sports’ and excluded from their plans. 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 The adaptation of the insurance sector is the hot pricing competition between opposing auto insurance brokers that has been in the main 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.

A recent negative example in the insurance market was when payment protection insurance policies (PPI’s) were uncovered by the FSA to be either useless or having been fraudulently marketed. This has generated a storm of legal claims against insurers or certain banks 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 for the greatest 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 in almost all instances liable for such acts.