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The UK Car Insurance industry is so diverse today, with so many companies advertising to attract Car Insurance customers, that it can become very confusing as to the status of who you are actually dealing with!
However, it is not only the number of Insurance specific companies that are making the playing field confusing, it is also some of the UK’s largest retailers whom are adding to the every growing list of companies offering Car Insurance. Tesco is the longest and most successful retailer selling Car Insurance and is being hotly pursued by the likes of Sainsbury’s, ASDA and Marks & Spencer.
So, this being said, let’s get back to the question about what an Insurance Company really is. An Insurance Company is the organisation that actually underwrites (insures) an Insurance policy. A simpler way of describing them is – the company whom will write out your cheque in the event of a claim! These Companies take on the risk and thus have to set their Insurance rates at a level they think will prove cost effective to them. There are a lot of similarities between the methodology behind an Insurer setting their rates and a Bookmaker setting their odds on a horse race! It comes down to the law of averages, how many motorists will have an accident and, out of those, whom are the most likely to have the accidents...etc
This is a very simplistic way to look at Insurance rate calculation mechanisms and there will be several other scientific calculations that get taken into account to formulate these complex rating algorithms, but the fact remains that Insurance Companies are taking a gamble. Such companies should not therefore be confused with Insurance Brokers or Consultants whom are Intermediaries.
Insurance Companies deal via Intermediaries, but almost all now deal directly with customers, effectively cutting Intermediaries out. As more people became comfortable with transacting business over the telephone and latterly more so the Internet, Insurance companies saw an opportunity to “deal direct”. However, due to lack of clarity on a company’s status, within the marketplace, all distribution channels remain key, which is why some companies whom have traditionally only sold policies directly to the consumer, now also sell via Intermediaries.
Regardless of whether a company is an actual Insurer or
Intermediary, most are members of the General Insurance Standards
Council (GISC),
which was created to regulate the sale of general Insurance in the
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