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Heritage Insurance Business Panel Q&A: 8

Stuart Butler, of Heritage Insurance Brokers, looks at the potential pitfalls of purchasing 'off-the-shelf' products, in light of recent speculation that Google or Amazon may be considering selling insurance online to their customers, in his weekly Business Panel column in the Guernsey Press.

Question 8:

I see there is speculation in insurance circles of an Amazon or even a Google entering the market. That would be good news for customers, wouldn’t it?

Stuart Butler replies:

This is topical for Guernsey as it touches on the potential of fintech or, in our industry, ‘insurtech’, currently being encouraged by Commerce and Employment.

From a risk perspective, providing insurance is very different from the Amazon model of supplying tangible goods on a sale or return basis very quickly to someone who wants a certain item.

In our case, cover is something people buy hoping they will never need to use. And it is only if they have to make a claim that they know whether they made the right initial purchase and the cover, when required, actually met their needs.

Our view at Heritage is that some as yet unknown newcomer may indeed come along offering ‘better, quicker, cheaper’ as part of the fintech revolution but customers nevertheless need to be cautious.

If, for instance, ‘Amazon Insurance UK’ was to offer cheap travel insurance, would it cover you from the time you left your front door until your return or – far more likely – just from your UK point of departure?

Off the shelf products might suit the ‘average’ customer but are less likely to do so for people in the Channel Islands whose plans can be disrupted by something as mundane as low cloud wrecking a £5,000 family holiday’s connecting flights.

Unlike a web page, brokers can give advice. That advice is impartial, professional and bespoke to the customer’s individual needs.

Brokers are also regulated and deal with multiple insurers. Some of those companies won’t deal direct because the UK regulator has concerns that web purchases don’t necessarily give sufficient information for informed decision-making.

So we welcome any ‘insurtech’ developments that give greater value but a broker is still your best guide to finding it.

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