The arrival of the internet has made the insurance sector super-competitive
Insurance is available for almost everything these days and the internet has in part produced a highly transparent and competitive market place for insurer services. The law requires that customers purchase certain types of insurance such as car insurance or medical insurance in many countries. Other insurance although optional in law is viewed by most customers as a ‘must have’ such as insurance for your home and personal valuable property or insurance for corporate property and business assets.
Then there is a third class of insurance 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, businesses tender different excesses and policy prices according to many different variables. There is also a secondary market for customers to buy the services of insurance borkers who trawl the market for products at the behest of their corporate or consumer clients. Underwriters are another group of agents operating in the insurance industry.
This is where the risks of any given insurance venture 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 the drivers accident record. Another example might be medical insurance where the patients health is taken into account. The internet certainly helps the insurance marke remain competitive and transparent but many customers are still finding themselves without cover when it really matters. A good example of this is winter sports insurance.
It is reported that over half of travelers to ski resorts travel without 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 excluded from their plans. In the main, European travellers also think that their E111 will cover them for treatment but this is not the case for many resorts. A very recent example of The adaptation of the insurance sector is the furious competition on price between rival providers of auto insurance that has been in the main facilitated by the mass uptake and use 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 causes pricing to be the primary competitive factor. A recent example of a failure in the insurance market was when payment protection insurance policies (PPI’s) were discovered by the FSA to be completely worthless or having been fraudulently marketed. This has generated a storm of legal claims against insurers or certain banks through claim back credit card charges companies 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. Another questionable product is internet security insurance that promises to reimburse the customer for any loss as a result 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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