Insurance: First to Offer E-Marketplace Internet Fraud Protection Policies
A La Jolla-based company has become the first in the world to offer E-marketplace Internet fraud protection insurance for items bought at online auctions, its president said.
WebTradeInsure earlier this month started offering the insurance, which is underwritten by New York Marine and General Insurance Co. of New York and certain syndicates at Lloyds of London, said Winnie Briney, president and CEO.
“The National Consumer League in Washington, D.C., collects statistics on Internet fraud, and in 1999, close to 87 percent of the incidents of fraud that were reported involved online auctions,” Briney said. “We recognized the issue of Internet fraud, specifically by misrepresentation or not shipping the goods. It was up 38 percent last year.”
She said the fraud insurance, which costs as little as $2.95, has a $25 deductible. The company intends to market it in partnership with auction Web sites. It recently completed a successful test of the program with Boxlot.com, a San Diego-based auction site. Negotiations are now in progress with other auction sites as well, she said.
“This is a credible insurance that insures that buyers will receive what was described or we will pay them minus a small deductible.” Briney said.
The company is also offering shipping insurance to compensate buyers for items that are damaged upon arrival. That policy is designed for commercial clients that might be receiving heavy, expensive items, she said.
“On a business-to-business exchange site where goods are being offered that are high-value , $20,000 and above , and are heavy, the highest priority need is shipping insurance,” Briney said. “We are offering full cash value insurance for 55 cents per $100 of value when you click through from the auction site to our site.”
Richard Dean, an analyst with International Data Corp., a Framingham, Mass., research and marketing firm, said WebTradeInsure has found a new niche in which to market insurance. Other insurance vendors will likely follow it into the marketplace, he said.
“I think their insurance concept makes sense, particularly in the case of consumer-to-consumer fraud at auction sites,” Dean said. “The problem of fraud in connection with auction sites has been highlighted in several articles in regional publications here recently and it seems the number of incidents are growing.”
However, WebTradeInsure’s shipping insurance for commercial customers will be going up against already established insurance services offered by carriers such as United Parcel Service, Dean said.
