The recession in the UK and US is causing problems for many banks and some insurance groups. A key problem is that suspicion of problems leaves a crisis of confidence and this in turn can sink even the biggest names. Intermediaries are bound by FSA rules not to use companies they have suspicions about.
Make no mistake, not even the biggest insurance groups are immune from crashing and burning.
Just as no car or driver can be totally accident free, so no insurance purchase can be totally safe. There is always some degree of risk. Not even the Health and Safety numpties can wrap us in total protection.
On our site we provide information on insurance providers and their products. We do not rate their products or the companies that offer them.
On investment based insurance products, how good they are depends as much on the state of stock and property markets as the product itself. This is why we do not list investment based life products and also took off the site details of equity release/lifetime mortgage and home reversion products. It would be good to say we anticipated the house price crash, but we didn’t.
If your insurer goes bust, then often another company steps in to take over the business - often at a fire sale bargain price. But in the current climate this may not happen.
If your insurer is based in the UK, on many types of policy you will be partially protected on claims and premiums. It is all very complex and you are unlikely to get all you would have done.
On health insurance, whether a hospital or clinic honours your treatment is up to them. Many will be honest and upright and accept that any debt for treatment is between them and the insurer. Others may demand you pay the bill before being let home, or make nasty legal threats to scare you. But if an insurer is in trouble, there is no obligation on a hospital or clinic to accept new customers for treatment.
If your insurer is based outside the UK, known as offshore insurance, then you have absolutely no protection on claims or premiums. Offshore insurers do not have to comply with FSA rules.
If you want to buy an offshore policy, no one can stop you, but you must beware the risk - even if the intermediary selling you the policy is based in the UK.
It is unlikely that UK based insurers will go bust, but with often complex world-wide links and investments, nothing is guaranteed and we would be foolish to suggest otherwise.
Health insurance: Hot Topic: September 2008
