Insurance Policies re: ebay and Paypal

[frangi]

I touched on this in another, earlier thread, but think it's deserving of a thread of its own so it will be seen and possibly discussed

Has anyone investigated the possibility of taking out insurance against loss incurred through ebay and paypal ?  If so, please feel welcome to pop in here and tell us what you know, no matter how little

We insure our vehicles, our home and contents, our lives, against injury, illness and unemployment etc. .. in fact, against all sorts of possible 'loss' situations. 

Does it therefore not make sense to insure against loss incurred via ebay and paypal .. particularly for full-time sellers or those who sell valuable items such as jewellery, etc. ?

I haven't seen ebay-paypal insurance policies offered .. it's just an idea that popped into my head the other day.  It makes sense to me .. does it make sense to you ?  And will it be viewed by insurance companies as a viable proposition ?
I don't see why not.  Famous people insure their legs and bosoms and their dog's unique appearance, etc.  Paypal and ebay have developed to the point where they're household words these days.  And losses are reported to commonly occur as a result.  Where there's the potential for loss ... there's usually a tailor-made insurance policy not far behind. 

Maybe we'll initiate a whole new wave of customers for insurance companies if we begin approaching insurance companies re: buying policies to cover loss incurred via ebay and paypal !   

I'm thinking there could be other beneficial spin-offs from ebay-paypal related insurance policies too.  For example, insurance companies are there to make profit, not loss.  With regard to vehicle insurance, for example, insurance companies employ an army of assessors whose task it is to ascertain the party at fault .. to decide whether or not a vehicle should be scrapped or repaired, etc.  Same with household insurance .. assessors determine if a fire for example, was deliberately lit by the policy-holder, or a case of electrical fault or arsonist, etc.

I'm confident that were insurance companies to offer ebay-paypal related policies, their assessors would be just as vigilant in scrutinising claims as vehicle assessors are.

Which can only be a plus for those who trade frequently or just occasionally, via ebay .. and who utilize Paypal within those transactions.

Aust. Post will need to lift its game, too.  Too many 'lost and missing' parcels, too many claims of 'broken in the post'.  With insurance companies on its back, Aust. Post will need to shape up.

Paypal and its alleged robotic operators with reportedly misleading and inappropriate advice will also come under the scrutiny of any insurance company at risk of making a pay-out to policy holders.

Ditto ebay.  I can't think of a better way to improve ebay than several dozen insurance assessors per hour contacting ebay's head office demanding information asap.

Another plus will the increased employment generated by insurance policies relating to ebay-paypal.  In time, those employed in ebay-paypal related insurance disputes will become expert and recognised in their own right.  And insurance companies will rightly vie for customers by advertising their success-rate, lower premiums, etc. etc. re ebay-paypal related policies.

If an insurance company offered policies to cover ebay-paypal related loss, I'd buy one tomorrow. 


Please contribute your thoughts and opinions .. this is groundbreaking .. it could inspire a whole new way to trade online with confidence 
 

[brumbymg]

Valid question, Frangi and I'd be interested in others' opinions.

A couple of hurdles I can see are
1. Risk - I can't see EBay and Paypal as being a good risk in the eyes of insurers.
2. Investigation costs - Assessors of a car or house loss have the evidence in front of them and/or police reports/investigations to support them - and one claim can be $20,000 or $400,000 or such. These resources and values justify the time spent by an assessor investigating a claim in depth. This is not likely to be happening on a $200 item - with the resources currently available from police, etc.

[matildasplace]

frangi, this might be a great idea for people that sell huge volumes or expensive items but I can't see it being viable for most sellers.

In 12 months we have sent out about 5,000 parcels via ebay, website and wholesale and only three we have had big problems with, one turned up after we issued a refund and the honest buyer contacted us and made payment again, one came back to us after a few months and the other one is only recent and I suspect it will turn up at the buyers place or be returned.

We have had quite a few others that have taken there time to get to the buyer or have ended up back on our door step but none of these have ended up costing us anything.

So all up out of 5000 parcels it has cost us $54.10 in refunding the buyer, I am guessing insurance would cost a lot more than this for a year.

In short, I think you are right and it would be great for massive sellers but would probably end up costing majority of sellers a lot more than it's worth.

[matildasplace]

Oh and AP compensated us for $50 so we were actually only out of pocket $4.10 

[frangi]

Hi Brumby .. lol .. yes, exactly

But ebay/Paypal claim they are a good risk.  Paypal claims 100% protection in information I cut and pasted from its own site a few days ago.

Demand .. supply.  I believe people would welcome the opportunity to insure against ebay-paypal incurred loss.

And insurers are always looking for new market

Would they refuse people seeking to insure against ebay-paypal incurred loss ?  And if so, would insurers state that despite wishing to satisfy a ready and waiting market, they considered ebay-paypal too much of a risk .. and as consequence they believed consumers would consider premiums to be too high ?

As regards your quite valid comments re: values and practicality, I'd expect insurers to offer various policies with premiums which reflected these.  Under $50 and the online trader would undoubtedly opt to pursue the matter through Aust.Post, rather than put in a claim to his insurer and risk his 'no claim' bonuses, etc.
 
If on the other hand, a policy holder believed his seller or buyer was trying it on, it may very well be worth it to them to hand the matter to his insurer .. who may discover that the buyer/seller had provided false or even no details at all to ebay when registering.  It would require ebay to very swiftly introduce responsible vetting of its members' IDs, possibly urgent legal requirement to do so.  The wild west attitude that launched online trading has to learn that time and progress (not to mention lucrative and phenomenal growth) carry responsibilities and obligations in a real, as opposed to cyber, marketplace.

In the event of a Paypal charge-back over a $700 bracelet, on the other hand, the seller might give it to his insurer to deal with.  It would be worth it to me, for example, to hand it to the experts, even it ended up costing me $25 later 9in increased premiums, loss of bonuses, etc.  

Paypal claims to award or withhold charge-backs etc. 'at its discretion'.  It's discretion would require to be accountable when confronted with hundreds of experienced insurers each day.  I relish the thought.  And I'm happy to leave the details to the experts to calculate. Insurers are noted for being hungry and resourceful.  I suspect if there's a dollar or two in it for them .. they'll run with it.  And if I were a regular seller, I'd happily pay $1,000 or more per annum.  It would be worth it to me in peace of mind alone.  And I'd definitely choose it over the other option .. loss and the fury and sense of injustice it causes.

But I'm just tossing it out so please continue to offer views, opinions and hard facts  

[frangi]

Wow .. congratulations, Tilly.  That's a phenomenal record you have there .. surprised ebay aren't begging you to be in their commercials !   From what I read in the ebay boards and elsewhere, you're the equivalent of a lotto winner !   Yes, agree .. for you, insurance would be surplus to your needs. 

[brumbymg]

But ebay/Paypal claim they are a good risk.  Paypal claims 100% protection in information I cut and pasted from its own site a few days ago.

Please don't try and tell me you typed that with a straight face...! 

I still think the risk is high - especially as the 'good' experience sellers (such as Tilly) will not see any value in it and continue to look after problems themselves - what the industry calls 'self-insurance'.  It will likely be the worse end of the market that will seek the added protection, which will immediately raise the level of risk and, therefore, premiums.

The other thing is, too, that once a compensation system is in place, it will be exploited. Fact.  The classic example in my career was when I was doing some systems development for an insurer on the NSW CTP motor vehicle insurance (green slip) scheme in 1989-91. When the claims side of it was implemented, the number of claims dropped dramatically for some months and started to climb later.  While it is true that picking up the new claims process had a learning curve to traverse, the level of actual claims put through could not be adequately explained by this.  It was pretty obvious to me that the various kin to the 'dodgy brothers' were sussing out the new turf before diving in.  If you were to track average CTP premiums over the years, you would see the trend very clearly. It was even such a major issue that the government stepped in and changed the rules on claims, because it was getting too expensive for people to register their vehicles.


I'd be interested to see if their are any actuaries out there that might be willing to hazard a guess on a risk assessment or indicative premium for any seller or market they would care to inspect.

[matildasplace]

Wow .. congratulations, Tilly.  That's a phenomenal record you have there .. surprised ebay aren't begging you to be in their commercials !   From what I read in the ebay boards and elsewhere, you're the equivalent of a lotto winner !   Yes, agree .. for you, insurance would be surplus to your needs. 

Frangi, ever heard of Dale Carnegie ?   

[brumbymg]

... ah yes. One book is VERY famous.

[perky penguin]

This is a wind up right?

You cannot be serious!

[brumbymg]

Hi perky penguin, I don't think I've welcomed you before - so ... Welcome to the OZRT.

As for this thread - I can understand why you might ask if it's a wind-up ... and you might be right.  On the other hand, for at least one person it may be a valid topic to discuss.

If it's a wind-up, or interest wanes, it will soon drift down the boards and get left behind.

If it's a cracker of an idea, then it'll get legs and prove to be a benefit to the whole online community.

But even if it is totally unworkable, the discussion raised will be informative to some and an exercise in exploring all the reasons WHY it wouldn't work.  We would then better understand our perceptions of the elements discussed and it could spawn further discussions that would be more useful.