The arrival of the internet has revolutionised the insurance industry
Insurance is available for almost everything these days and the world wide web has helped fashion a highly transparent and competitive market place for insurance providers. You are required by law to have certain insurance such as car insurance or medical insurance in certain jurisdictions. Other insurance although optional in law is viewed by most people 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 which is more specialised such as pet insurance, wedding insurance or Insurance for adventure holidays or extreme sports. Either in the high street or on the internet, businesses tender different excesses and policy prices dependent on many different things. There is also a secondary market for the services of insurance brokers who shop around for products at the behest of their corporate or consumer 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 decides what the insurer should charge for their services or whether to insure at all. To take the example of car insurance, the underwriter would assess in detail the driving history of the customer. In medical insurance, another example might be where the patient’s medical records are examined. The mass take-up of the internet definitely helps the insurance sector remain competitive and transparent but many customers are even now finding themselves without cover in times of emergency. Extreme winter sports insurance demonstrates this well. The industry believes that over half of holidaymakers to winter skiing destinations have no insurance and although the other half do, less than a quarter of them are actually insured for skiing and snowboarding which are classified by many providers as ‘extreme sports’ and not included in their basic cover. Many European travelers also think that their E111 will cover them for treatment but this is simply not the case for many resorts. Another interesting example of The adaptation of the insurance sector is the furious competition on price between rival auto insurance brokers that has been in the main facilitated by the introduction of price comparison sites. Car insurance is required by law so It simply must be bought by every individual with a car. This causes pricing to be the chief competitive factor.
An example of negative activity in the insurance market was when payment protection insurance policies (PPI’s) were uncovered by the FSA to be completely worthless or having been missold to many customers. This has led to a huge amount of litigation and firms being created for the single purpose of acting as legal assistants so that customers can claim back any PPI that might have been missold to them. Compare insurance on the net to give the greatest deal. Another questionable product is identity theft insurance that claims to refund the subject for any loss as a result of cyber fraud or identity theft. However many people are unaware that the bank is in most sets of circumstances liable for such acts.