Sam Dunn: Can insurance on the web earn our trust?

Openness is the very least customers should expect
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What wouldn't you buy online? I wouldn't think twice about purchasing a DVD box set of the first Starsky & Hutch series on the internet from a well-known retailer, but I might hesitate if the same product was on offer on eBay - even at half the price.

Although the online auction site has established a formidable reputation and put plenty of safeguards in place, there are just too many scare stories of lost or fraudulent goods for me to feel confident about going with the flow.

Friends of mine are much less conservative online. When villas in Ibiza, second-hand bicycles and even haircuts - to name just a few items - are happily ordered and booked with a few clicks of a mouse, I realise I've a lot of catching up to do.

But that more of us are willing to shop online or use the internet as a research tool is not in doubt.

Thanks in part to the rise of price-comparison websites - which allow you to switch between fuel or broadband suppliers, say - hundreds of thousands of consumers who might otherwise have taken slow steps towards the web are now happy to use its power to save themselves hundreds of pounds.

Conscious of this ground- swell, and aware that the web can make comparison of prices quick and easy, more companies are cleaning up their act to appeal to consumers.

This is a vital step for those websites selling financial products. Last week, the Association of British Insurers announced a consultation on new guidelines for members that will insist on greater transparency when life cover, critical illness policies and income protection are sold online (and over the phone).

Openness is the very least customers should expect, and the ABI's efforts to make these often complex products easier to understand at point of sale is both welcome and long overdue.

Buying these types of cover on your own carries a much greater risk of misunderstanding and of making the wrong choice, than doing so with the help of a regulated financial adviser.

Norwich Union revealed on Monday that it had rejected nearly a quarter of all critical illness claims in 2005. Around half of these were down to consumers not disclosing key medical facts, the others to the holder's illness not meeting the policy conditions.

Some of these mistakes will have been made because of either poor understanding on the part of the customer or poor explanation on the part of the company - and either way, these problems can easily be magnified online.

It is to be hoped the ABI's consultation will bring greater clarity, but in the meantime stick to a golden rule: never buy a financial product you don't understand.

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