Insurance offers protection against financial loss following an event, such as a
fire, that causes damage and may occur in our daily lives. Based on mutual
trust, insurance thus provides financial security by assuming a risk, for example
fire risk, which an insured transfers to it via an insurance contract. In exchange,
the insured pays the insurance company a fixed amount, known as the
insurance premium. The details of these benefits are defined in the insurance
contract and in the related General Insurance Conditions
How does insurance work in detail?
Anyone who takes out an insurance policy pays a certain amount of money -
called a premium - to the insurance company. The premiums and contributions
paid end up in a large cauldron, which is then used to pay any compensation
claims of all insured people.
If an accident occurs and causes financial loss to an insured, the insurance
company covers that financial loss from what it has available from the
premiums received; as a rule, however, only up to a level agreed with the
insured and defined in the insurance contract. This principle of pooling and joint
assumption of risk is also known as "collective risk assumption".
Taking the example of compulsory automobile third-party liability insurance, all
holders of automobile insurance, by paying their premium, transfer to the
insurance company, among other things, the financial risks in the event of
damage to third parties. In the event of an accident, civil liability insurance
covers damage caused to third parties by the driver of the vehicle responsible
for the damage.
To be able to assume this risk the insurance must:
Evaluate over a given period (several years) the frequency and average cost of
a claim among a target of potential insured persons. (for example, drivers of
vehicles for mandatory automobile liability coverage).
Define a price for risk coverage based on the frequency and probability of the
risk occurring. Because of this principle, very rare events are extremely
difficult to insure because their probability is difficult to determine.
Evaluate whether the target group of policyholders is willing to pay the defined
price
Sign a sufficient number of contracts to manage with statistical methods.
Adapt the price or risk coverage according to the evolution of the cost of
claims with the aim that the premiums collected always cover the cost of
claims. To achieve this objective, the tools available to the insurance company
are the adjustment of the premium, the addition/reduction of a deductible paid
by the insured, or the adjustment of the coverage with the inclusion or
exclusion of elements of coverage (for example, for car liability insurance, the
exclusion of closed-circuit car racing).
The different types of insurance
What are so-called "white label" insurance
products?
In the world of insurance, a "white label" product is an insurance product or
insurance cover sold on the market under the brand (label) of another insurer or
insurance broker (also called a third-party provider).
Third-party providers require such products because they cannot bear the
corresponding risks themselves, but still want to offer their customers insurance
coverage from a single source.
A white-label product can also be a secondary brand, which is introduced by the
insurer itself as an additional product brand alongside the primary brand. This is
often the case with insurance products sold only online.
In any case, even if the latter is highlighted in the communication to customers,
the contractual documents always talk about the insurance that carries the risk.
What are the advantages of insurance
products sold only online?
A product sold only via the Internet generates lower costs than a product sold
through traditional distribution with field staff and branches. As a result,
insurance premiums for online products are often among the
cheapest. However, focusing only on the level of rewards is often not
enough. What are your expectations in terms of the service offered? Are you
willing to accept all the advantages and disadvantages of an online insurance
product?
Advantages: (generally) lower premiums, online contract conclusion process
only (fast and possible at any time), automated claims processing, online
contract amendments.
Disadvantages: no personal contact and advice, products generally less
adaptable to your needs.
What is an insurance broker?
Insurance brokers (or insurance mediators) mediate the negotiation of insurance
contracts with insurance companies on behalf of the policyholders they
represent and ideally should mediate in the interests of their clients,
independently of the insurance companies.
With the authorization of his clients (a signed power of attorney - called a
brokerage mandate) the broker can conclude contracts on behalf of his
clients. In doing so, it must be as neutral as possible and must not commit itself
to any particular insurance. To this end, insurance brokers are supervised by
FINMA (Federal Financial Market Supervisory Authority) and must be registered
in a public register.
Rights & duties of insured persons
The insurance relationship between insurer and insured is based on the
insurance contract, also known as the "policy".
This contract is a promise made by the insurance company to the insured to
repair, usually financially, a damage suffered. To draw up this contract, the
insured must provide the insurance company with all the necessary information,
in particular to evaluate the risk and calculate the appropriate price of the
coverage.
Rights and duties also come into play in the event of an accident. In this case,
the insured are entitled to compensation, but only if the elements that define
this right are respected:
The event that occurred is mentioned as insured in the general insurance
conditions.
the event caused an insured loss
the damage is caused to an insured object/person
the damage occurred in an insured location
the damage occurred during an insured period of time
If all these criteria are met, and the trust bond is present, this means that the
damage is covered and the insurer is obliged to provide the insured with the
benefit defined by the insurance contract.
In exchange, the insured must provide the insurance company with all the
information and documents necessary to clarify and certify the circumstances of
the event and the extent of the damage.
