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 some countries. Other insurance although optional in law is viewed by most customers 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 focused mainly on the consumer market that is highly 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. There also exists a secondary market for the services of insurance brokers who act as agents buying products at the request of their consumer or corporate clients. Another agency service in the insurance industry is underwriting.
This is where the risks of any given insurance venture are calculated and the underwriter determines the premium and cost of the insurance or whether or not insurance should be offered at all. An example from car insurance would be to assess the drivers accident record. Another example might be medical insurance where the patients health is taken into account. The introduction of the internet greatly helps the sector maintain its competitiveness and transparency but many customers are still finding themselves uninsured in times of emergency. Winter sports insurance is an excellent example of this. The industry believes that more than 50% of holidaymakers to winter skiing destinations are uninsured and although the other half do, less than a quarter of them are in fact covered for skiing and snowboarding which are categorised by almost all insurance firms 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 way the insurance market is adapting is the hot pricing competition between opposing auto insurance firms that has been mainly 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 chief competitive factor.
A recent negative example in the insurance market was when payment protection insurance policies (PPI’s) were discovered by the FSA to be negligent drafted or having been missold to many customers. This has lead to a huge amount of litigation and firms actually being set up 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 for the greatest deal. A further dubious insurance product is internet security 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.
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