A stable, well-functioning financial market for allA stable, well-functioning financial market for allIs there a need for supplementary and gadget insurance?
Consumers’ need for supplementary insurance differs by age. Younger consumers have a greater need for this type of insurance, while older consumers often have little need for it. The need for gadget insurance is limited, and there is often no need for it at all. These are the conclusions of an in-depth analysis conducted by Finansinspektionen (FI).
Summary
Supplementary insurance is insurance linked to basic insurance such as home insurance and auto insurance. All risks insurance is probably the most common supplementary insurance, and it covers damages to property that are not covered by basic insurance. Gadget insurance policies are freestanding policies that cover specific item. Normally, they offer more extensive insurance protection than all risks insurance.
Many consumers have supplementary and gadget insurance, and the premiums for these policies amount to several billion (SEK) every year. Therefore, FI has investigated whether consumers have a need for supplementary and gadget insurance. We have assessed the concept of need based on the following definition: insurance products should provide consumers as a collective with reasonable insurance compensation in relation to the premium paid. Low compensation in relation to the premium is an indication that consumers are paying for a protection for which they have little need.
The analysis shows that younger consumers have a greater need for supplementary insurance while older consumers often have little need for such insurance. Consumers' need for gadget insurance is limited, and there is often no need for it at all. This need can vary, however, depending on the individual, particularly if a person does not have home insurance. The analysis also shows that insurance companies' costs to provide gadget insurance amounts to almost 60 per cent of the premium income. The costs are almost twice as high as the compensation paid to policyholders and consist largely of remuneration to the stores that provide the gadget insurance.
A consumer cannot receive compensation from two insurance policies for a single event. It is therefore unnecessary to have several insurance policies that cover the same object and event. It is also often better to have one all risks insurance policy than several gadget insurance policies. Consumers should review their insurance policies and avoid having overlapping insurance coverage.
Insurance companies are responsible for finding out consumers' insurance demands and needs before offering a supplementary insurance. When it comes to gadget insurance, insurance companies are instead responsible for ensuring that the stores providing the policies consider the demands and needs of the consumer before offering an insurance policy.
