Car Insurance Comparisons Bring Choice and Competition to the UK Car Insurance Market

InsuranceLecturer — Comparing car insurance is now considered to be the norm by the UK insurance buying public, however this was not always the case in the not so recent past. It was not until the Road Traffic Act was introduced in 1930 that for the first time in the U.K. a statutory obligation was put on the users of all cars, to provide security against their legal liability for death of or bodily injury caused to third parties. From this obligation Car Insurance was born.

Initially it was not possible to compare car insurance quotes from more than one company. Before car insurance became compulsory in 1930, the insurance companies in the face of rising claims from road traffic accidents, had all got together into a cartel to fix the covers available and the rates amongst themselves.

Car insurance rates were set by an association of all the car insurers called the Accident Offices Association. The AOS set the car insurance tariff, which was payable by all drivers, no matter which company or broker you bought the cover through. You paid your standard premium and you were covered!

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Competition and choice first arrived for car insurance buyers in 1939 and really took off after the war. It came in the form of the Lloyds motor insurance underwriting market that was set up to take specialist car insurance risks and operated outside the tariff. Word soon got around the country that cheaper non-tariff car insurance was available and post war, the emergence of the regional and local car insurance broker offering Lloyds motor underwriting services meant the writing was on the wall for the AOS and cheaper car insurance was on the way for all.

The original 1930 Road Traffic Act and the first attempt at consolidating all the subsequent amendments issued in 1960 were drafted with the existing practices of the car insurance companies under the tariff. However, car insurers become more self-critical and receptive to new ideas and these were stimulated by the eventual scrapping of the U.K. Motor Insurance Tariff in 1968. Competition for your premium was finally born and changed the way that car insurance was distributed.

However you still had to buy your car insurance from a high street broker who was limited in the choice of policies he could offer you, which was dependant upon the number of agencies he held the car insurance companies, or if he was a specialist car insurance broker who had access to the Lloyds market. It wasn’t until the late 1980’s that cheaper car insurance was offered to the UK car owner for the first time, with the arrival of call centres and direct insurance cutting out the middleman and broker.

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It was still very difficult to compare car insurance quotes as you had to phone round the various companies and repeat the process again and again to arrive at a cheaper quote. During the 1990’s with the arrival of EDI (electronic data interchange) the high street brokers were able to offer car insurance comparison systems to their customers for the very first time.

Although these systems returned car insurance price comparisons for the number of agencies that the brokers was signed up to, the choice was still fairly limited to a few policies. More importantly these systems were not ‘full cycle’ and did not produce much documentation. Competition and choice to the UK car insurance market was finally realised at the turn of the century with the arrival of the car insurance price comparison system online.

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These policy aggregators collect your information once, run it through their systems and return a list of car insurance quotes from a number of companies, using a local rating system. Unlike an online car insurance broker who will collect your premium on behalf of the car insurer, car insurance comparison websites only point you in the direction of the underwriting company and earn a commission for their comparison services if you take up the quote.

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There are many websites offering car insurance comparisons of various sizes in the Internet today. All types of car insurance can be compared online, from classic car insurance quotes through to vintage car insurance for imports. These comparison systems not only save you time when searching for cheap car insurance, but also offer you choice and information to research the market for the best car insurance quotes, information that has not been available to the public before now!