Discussion
Let's say I offer rented can machines to businesses. So they pay me £x/month, and their staff can pay 50p for a can of Coke.
Can I offer them insurance against the machine using (as an example) too much power? E.G. If it exceeds the specification power usage then I will pay the excess of their power bill.
What I'm getting at is whether insurance like this is "special" and I need to be underwritten or similar before I offer it.
Can I offer them insurance against the machine using (as an example) too much power? E.G. If it exceeds the specification power usage then I will pay the excess of their power bill.
What I'm getting at is whether insurance like this is "special" and I need to be underwritten or similar before I offer it.
Jemco said:
This isn't a regular type of cover that people consider. I hope that I haven't taken your question too literally - but, it is an unusual scenario.
Finally, under the Financial Services Act, unless you are FSA authorised, you are unable to offer insurance to your customers without involving an authorised intermediary. And, guess what? We need to earn a margin too.
I was trying to use an analogy, not really talking about coke machines as you've no doubt guessed. Finally, under the Financial Services Act, unless you are FSA authorised, you are unable to offer insurance to your customers without involving an authorised intermediary. And, guess what? We need to earn a margin too.
Could we sell the same service under a different name? E.G. Using our Coke machine example, how about "Electricity Overusage Protection Service" instead of "Electricty Overusage Insurance". I suppose I'm asking if "insurance" is a protected word when describing a service.
Jemco said:
It's not the word "insurance" that's regulated, but the practice of transferring risk to an underwriter in return for the payment of a premium is.
I don't quite understand. Using a different example, we bought a company car recently and paid an amount for servicing and maintenance for the first 3 years. As I see it, that's transferring risk from us of excessive maintenance costs to the dealership/manufacturer. It was sold as a "Service Plan" but is effectively insurance. Does the dealership have to be FSA regulated to sell the service plan?Jemco, thanks for all the help so far
I still don't quite understand the distinction between an expected and unexpected risk. With the maintenance plan from the dealer, it covers brake pads/discs, tyres, wiper blades, etc. Depending on how the car is driven, there will be a different usage of these consumables.
I can understand how the servicing element can just be a payment in advance, but the maintenance element is a variable cost surely. There must be some situations in highly unusual usage where the dealership spends more on maintenance and servicing than the consumer has paid for? Likewise there will be many very profitable jobs for the dealership; they pick a commercial rate which works for them most of the time.
I still don't quite understand the distinction between an expected and unexpected risk. With the maintenance plan from the dealer, it covers brake pads/discs, tyres, wiper blades, etc. Depending on how the car is driven, there will be a different usage of these consumables.
I can understand how the servicing element can just be a payment in advance, but the maintenance element is a variable cost surely. There must be some situations in highly unusual usage where the dealership spends more on maintenance and servicing than the consumer has paid for? Likewise there will be many very profitable jobs for the dealership; they pick a commercial rate which works for them most of the time.
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