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The arrival of the internet has changed the way we purchase insurance forever

These days, you can get insured for almost anything and the internet has helped fashion 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 certain jurisdictions. Other insurance although not legally required is seen by most as a ‘must have’ such as travel 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 that is highly 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 set their policy prices and excesses at varying rates depending on various factors. There also exists 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.

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 in detail the driving history of the customer. Another example might be medical insurance where the patient’s medical records are examined. The introduction of the internet greatly helps the insurance sector maintain its competitiveness and transparency but many customers are still finding themselves without cover when they most need it. Winter sports insurance is an excellent example of this. The industry believes that more than half of holidaymakers to winter skiing destinations are uninsured and although the other half do, only a quarter of them are actually insured for skiing and snowboarding which are classified by most insurers as ‘extreme sports’ and not included in their basic cover. In the main, European travellers also think that their E111 is adequate to get them treatment but this is untrue for many resorts. Another recent example of how the market is changing is the hot pricing competition between rival auto insurance firms that has been mainly facilitated by the introduction of price comparison sites. We have to buy car insurance as a matter of law so everyone must purchase it. This puts price up there as the chief competitive factor.

A recent negative example in the sector 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 generated a storm of legal claims against insurers or certain banks 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 insurance on the web to give the best deal. A further dubious insurance 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.