The insurance industry both in the
United Kingdom and abroad is typically a very mature and highly regulated
sector of western economies. Insurance is the transfer or a risk from the
policyholder (who pays a lender an annual sum known as the premium) in
return for the transfer is risk to the lender (risk and terms are
qualified in the form of an insurance policy). In the event something
happens to the policy holders person or property that has been insured,
the policy holder can claim from the insurance company usually for a
financial sum usually equal to that of the loss incurred. Most insurance
companies provide strict conditions as to the nature of insurance claims
to prevent insurance fraud and to exclude of certain acts, (deemed not
insurable such as acts of god). In most countries insurance for property
is a condition of a mortgage being approved in the first place. It is also
common sense to protect the most valuable assets you own such as your
home, your car and of course your life.
In the UK there are literally hundreds
of types of insurance to buy you peace of mind and protect both
individuals and businesses. These sectors include Property and Home
Insurance, Travel insurance, Commercial insurance, Life and Health
Insurance, income protection and niche commercial insurance for specialist
business activities. The industry is highly regulated and also very
competitive due to the huge increase in the use of the Internet to obtain
new business and provide comparative price tools via insurance portals.
The industry is made up of insurance companies, middleman intermediaries,
insurance brokers, appointed representative and introducers.
The use of the Internet to sell insurance policies
is growing rapidly as most large lenders now sell directly to the general
public via their websites as well as using the intermediary market. The
ability to sell policies direct online without the use of a call centre or
a middleman has reduced the cost of sale or for most lenders. For this is
particularly true for Home Insurance and car insurance and travel
insurance where the simplistic nature of policies makes it easier for
users to answer multiple choice questions online in order to generate a
quotation, which can then be easily processed using a credit card.
The policy holder policy documentation can be downloaded by the
policyholder and the whole process can be achieve in minutes form anywhere
in the world in the middle of the night.
In the United Kingdom, the market for
insurance is also underwritten by Lloyd's of London which is based on a
grouping or syndicate system that has been established in London for over
300 years. It dates back to maritime protection between merchants and gave
birth to the insurance industry in the coffee houses of London. Most
brokers have been pre-approved by either a placing broker (or a syndicate
based in Lloyd's of London), to sell a particular policy. They will
normally receive a commission and may or may not have the regulatory
approval to hold clients' money. The book of business may build up to a
point where the insurance broker receives a profit share from the lender
(or underwriter) based on the profitability of the book of business.
Therefore, the number of claims and their value is directly impacting
brokers future potential earnings and steers their behaviour towards
attempting to only ensure good quality risks that are less likely to have
produce a future insurance claims. This page does not constitute advice
and should be viewed as general information only. We strongly recommend
you contact your local insurance broker for professional advice.