The UK car insurance industry
In the UK, there are around 30 million people who are licensed to drive cars on the roads. The vast majority of these people also possess car insurance, which is required by the Road Traffic Act 1988. Read about the history of insurance.
When searching for their annual car insurance policy, drivers have an incredibly large selection of insurers to choose from. There are over 50 motor insurance companies in the UK which offer a range of products for car, motorcycle and van owners. Read about the top five car insurance companies in the UK.
Car insurance and individuals
The reason why insurance is mandatory is to protect the customer from the financial consequences of having a car crash.
If there was no such thing as car insurance, who would dare to own a car? After all, a simple single vehicle crash could mean the loss of thousands of pounds if the vehicle is written off or needed repairs. If there were passengers or other vehicles involved in the accident, compensation could feasibly mount up into hundreds of thousands of pounds.
However, the protection provided by car insurance allows the majority of people to own a car. They do not need to have large pools of money set aside in case of an accident. Instead, this money can be used fruitfully.
It is not only car insurance that offers this combination of freedom and security. Every kind of insurance is vital to letting customers be able to afford expensive purchases and release their money so that it can be put into productive use.
The amazing impact that individuals have on the overall economy can be seen in an estimation published by the Association of British Insurers (ABI). It has been found that if there was a 1% increase in the demand for insurance, this would represent a GDP increase of £11 million.
Insurance and Britain's economy
Although insurance is incredibly important for individuals in every aspect of their life, it is vital to look at the wider picture. The millions of pounds that people spend insuring their possessions has great potential.
Insurance is extremely valuable to the UK's economy. UK general insurance companies - that is those who sell any type of insurance but life - have assets worth more than £100 billion. These assets can then be used for feeding the rest of the economy through investment in loans, projects and profitable ventures.
The annual output of the UK insurance sector is roughly £18 billion, although the value it creates is closer to £13 billion, making it the third largest insurance industry in the world. The importance of insurance can be seen in the fact that it accounts for 1.2% of Britain's gross domestic product (GDP).
Despite these impressive figures, it is insurance's indirect contributions to the economy that are the most significant.
When the Nottingham University Business School Centre for Risk and Insurance Studies looked at the role insurance has to play in the UK economy, it concluded that, ".without insurance, a modern industrialised economy would simply not be able to exist."
Insurance can be classified as one of the three great pillars of commerce, featuring alongside banking and the joint-stock company. It lets risks be shared and dealt with so that the onus is removed from the individual or the business, freeing their finances and allowing risks to be taken and trade to occur.
More Info
- The UK car insurance industry
- The UK's top 5 car insurance companies
- World top 5 insurance companies
- Spotlight on Norwich Union
- ABI & Motor Conference
- About the WFII
- What is an insurance intermediary?
- Online car insurance
- Car insurance industry and combating crime
- History of insurance
- Spotlight on Zurich Financial Services
- Car insurance adverts
- Spotlight on Royal & SunAlliance
- Spotlight on NFU Mutual
- Professions and car insurance claims
- Motor Insurers' Bureau
- Women’s car insurance
- Car insurance warning for pregnant women
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