The arrival of the internet has made the insurance sector super-competitive

Insurance covers almost everything these days 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 not required by 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 focused mainly on the consumer market which is more specialised such as pet policies, 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 is also a secondary market where insurance brokers sell their services who act as agents buying products at the behest of their corporate or consumer 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 determines the correct pricing arrangement for the insurance services or whether the agreement is viable at all. To take the example of car insurance, the underwriter would assess the driver’s accident record. Another example might be medical insurance where the patient’s medical records are examined. The internet is certainly helping helps the sector remain competitive and transparent but many customers are even now finding themselves uninsured when they most need it. Winter sports insurance is an excellent example of this. The industry believes that more than 50% of travelers to ski resorts travel without insurance and although the other half do, less than a quarter of them are actually covered for skiing and snowboarding which are categorised by almost all insurance firms as ‘extreme sports’ and not included in their basic cover. Many European travelers also think that their E111 Is good enough for treatment but this is untrue at most resorts. A very recent example of The adaptation of the insurance sector is the hot pricing competition between opposing auto insurance companies that has been largely 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 puts price up there as the primary competitive factor.

A recent example of a failure in the insurance sector was when payment protection insurance policies (PPI’s) were discovered by the FSA to be negligent drafted or having been fraudulently marketed. This has led to a huge amount of litigation and firms actually being set up for the single purpose of acting as legal assistants so that customers can claim back any PPI that is covered by the FSA’s investigations. Compare insurance on the net for the best bargain. A further dubious insurance product is internet security insurance that claims to reimburse the customer for losses on account of cyber fraud or identity theft. However many people are unaware that the bank is in most sets of circumstances liable for such acts.