What does insurance do?
Insurance is a professional tool to help you manage everyday financial risks and liabilities. It offers compensation and relief from damages you might suffer either by accident or misfortune. This tool has become a popular way of allowing people to minimize their individual financial damage by combining their potential for loss with that of others.
How does this happen?
Compensation comes from a fund of money contributed by all the holders of individual insurance policies. In other words, when you buy an insurance policy you are pooling in your money, in the form of premium, and individual risks and sharing them with others. This creates a common fund from which you may later rightfully benefit.
And did you think insurance is complicated?
Actually, the basic principles are pretty straightforward. Insurance companies assess the potential risk of any eventuality and the potential downside associated with it. Then, based on past experience and their own expertise, insurance companies calculate the premium that a customer needs to pay to provide cover against injury or loss. When the insured event happens, the company pays out the agreed level of the claim. Insured events are generally grouped by categories which determine the variety of insurance products available on the market.
What should I consider before buying an insurance policy?
Some kinds of insurance are compulsory – for example, you need to be insured to drive a motor vehicle, and when taking out a home loan the bank will require that you and your property are insured. Where other insurance products are concerned, you will need to think about the potential impact that the insured event could have on you. The higher the risk/impact the wiser it would be to purchase cover.
Rights of withdrawal and cooling off periods.
Check before you buy whether there is a cooling off or right of withdrawal period applicable to your policy. If there is, you have time after the purchase to consider the policy in more detail. Read the policy. An insurance policy is a contract that sets out legal obligations on both the policyholder and the insurer. Common sense tells you that you should know exactly what you are agreeing to. If there are details that are still foggy, do ask you insurer or insurance adviser for clarification.
Is there anything the insurer needs to know?
Make sure you tell your insurer or insurance agent about any personal circumstances that might make a difference when you come to claim. For example, the insurer may need to know about medical conditions you have to make sure the product is suitable for you.
Know your rights. The Malta Financial Services Authority (MFSA) is the local authority regulating insurance business in Malta and Gozo. The MFSA website (www.mfsa.com.mt) carries a consumer section where you can find further information.
Where can I buy insurance?
Insurance products can be purchased in a variety of ways.
You can buy insurance through your local insurance agent / tied intermediary and through insurance companies that sell through their own employees.
Alternatively, insurance brokers will be able to offer you advice about choosing between a variety of products to get one that suits your circumstances.
And do you know whether your employer’s already offering you cover?
So before buying insurance, it is worth bearing in mind that insurance cover could very well be part of your benefits package at work.
Finally, you may find that some kinds of insurance are sold alongside another product they relate to – for example, getting travel insurance from your travel agent.
For the full list of MIA members who provide insurance products you can check this website.
How can I save money?
The price you pay for your insurance requirement can vary, depending on your insurance needs and the insurance company you buy your policy from.
It always pays to shop around as prices may vary from company to company. You can call companies directly or access information on the Internet.
But make sure that you do not shop by price alone. You want, and deserve, a company that answers your questions and handles claims fairly and efficiently.
Select an agent or company representative who takes the time to answer your questions. Remember, you will be dealing with this company if you have an accident or other emergency.
What if something goes wrong?
Your policy documents will tell you what to do if you need to make a claim. If you are not satisfied that your claim has been handled correctly you should contact your insurer, who will tell you how they will handle your complaint. If you are not satisfied with the insurer’s final response to your complaint, you can refer your case to the Financial Services Consumer Complaints Manager.
This service is free to all consumers.
What protection is there against the possible insolvency of an insurer?
The Protection and Compensation Fund provides peace of mind to private policyholders against the risk of insolvency. The Fund is financed by all the locally licensed insurers themselves and provides limited compensation to policyholders if one of these insurers becomes insolvent. Payments out of the funds are made in respect of protected risks only and to qualified persons.