Online Insurance - Opportunity or Risk?
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People look for all kinds of insurance products online but are these insurance companies really offering good value? Where are the best insurance deals? These pages independent of the insurance industry, by Dr Patrick Dixon, Chairman of Global Change Ltd.
Insurance companies work by averaging risk, and taking a cut of premiums. Web-based insurance applications in theory allow insurance brokers to cherry-pick lowest risks and offer low premiums. But it is still hard to be sure your insurance quote really is the best.
Motor insurance, house buildings insurance, house contents insurance, health insurance, holiday insurance, life insurance - all these should be easy to fix online with instant quotes, electronic insurance contracts, e-mail confirmation. It's getting better for people living in some countries but there's a long way to go.
On the other hand, insurance companies themselves are worried about online "aggregators" - sites which gather many insurance products onto one page for price comparisons. They fear that insurance will just become a standard commodiy, driving prices and profits down. In theory good news for customers, but not if at the expense of good support.
Problems with online insurance quotes
- Price of insurance may be given as guide only - not binding.
- Some insurance companies quote only by e-mail or phone.
- Insurance policies issued online may be invalid in law in some countries
- Insurance may only apply to only one country - but is it yours?
- Few global insurance brokers so far in terms of being able to offer for example auto cover in any territory with online application.
- Difficult to get a one-click comparison of all policy premiums from different insurance companies, all with correct insurance data, and able to issue temporary cover immediately on payment of first insurance premium by credit card.
- Sites offering quotes from many insurance companies rarely include the whole market - because some insurance companies are not prepared to pay them a commission. And that means the cheapest commission-free deals may not be on these insurance "portals".
- You have no guarantee that all the best insurance deals are being presented fairly. Are the commission rates the same? Is the website steering you towards insurance policies which give the broker the highest return? A good site will show you exactly how much of your insurance premium will go to the broker - indeed a legal requirement in some countries.Some companies accept processing of a credit card payment as proof of insurance cover. In other words, if the insurance company takes payment on a certain day, it will appear on your statement as proof that they have agreed the policy. However there is still a problem for the insurance company to be sure you are who you say you are, that your address is correct, the details accurate. This is particularly an issue with payouts for insurance claims.
Problems with online insurance claims
- Same problem of signing an insurance claim form.
- Once again insurance companies fear online fraud.
Watch many insurance industry videos by Patrick Dixon
Online insurance article written 2006, updated 2008.
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