These days, you can get insured for almost anything and the internet has created a highly transparent and competitive market place for domestic and global insurers. The law requires that customers purchase certain types of insurance such as car insurance or medical insurance in certain jurisdictions. Other insurance although not legally required is viewed by most people as a ‘must have’ such as home insurance or insurance for a person’s business interests or property belonging to their business. There is then another type of product focused mainly on the consumer market which is more specialised such as pet insurance, wedding insurance or certain types of extreme sports insurance. Either in the high street or on the internet, companies offer varying rates and excesses depending on various factors. There also exists a secondary market for customers to buy the services of insurance borkers who act as agents buying 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 patients health is taken into account. The internet is certainly helping helps the sector maintain its competitiveness and transparency but many customers are even now finding themselves without cover in times of emergency. Winter sports insurance is an excellent example of this. It is reported that over 50% of travelers to ski resorts have no insurance 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 excluded from their plans. Many European travelers also think that their E111 is adequate to get them treatment but this is not true in most resorts. Another recent example of The adaptation of the insurance sector is the furious competition on price between rival auto insurance brokers that has been mainly facilitated by the mass uptake and use of price comparison sites. Car insurance is required by law so everyone must purchase it. This makes price the chief competitive factor.
A recent example of a failure in the insurance market was when payment protection insurance policies (PPI’s) were uncovered by the FSA to be negligent drafted 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 might have been missold to them. Compare insurance on the web to give the best bargain. Another questionable product is internet security insurance that promises 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.
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