Insurance isn’t boring. 

Fact!

Forget all your biased thinking, insurance has a fascinating backstory (doesn’t everyone these days...?) It’s also a major force in the UK and global economy. The volume of insurance premiums internationally is greater than the GDP of Spain, Italy and France combined. What does that mean? In 2021, premiums rose above an eye-watering US$6.8 trillion; that’s about 7.1% of the world’s economic activity. It’s huge. More importantly, it’s impossible to imagine social and economic development without insurance. So, the next time you groan with annoyance because your car or household insurance is due for renewal, consider this: 

The UK was the birthplace of insurance according to many, modern fire, accident and life insurance companies first emerging here in the 1700s. They dominated the markets for most of the 19th Century and, because they knew their stuff, their models became a blueprint for insurance companies throughout the world.  

What fuelled the companies to form when they did? A bright spark. Literally. Not someone with a generous sprinkling of brain cells but a rogue flare from an oven at the King’s bakers on Pudding Lane in the City. 1666’s Great Fire of London raged for five days, ripping through its wooden buildings and destroying a third of its structures, including St Paul’s. With no fire brigade, locals and their buckets were drafted in to douse the flames with water.  

What do they say about necessity being the mother of invention? No wonder insurance companies sprang up then to provide compensation for fire damage and to run their own fire brigades. Houses with insurance cover would display metal plaques (fire marks) on their walls to show which company was protecting them. So, it wouldn’t be stretching things too far to say the Great Fire of London created fire insurance. 

What about car insurance? As you’d imagine that came later, the first UK motor policies coinciding with the initial London to Brighton car rally in 1896. They used contracts that had originally been drafted to apply to horse-drawn vehicles as a base.  

Interesting, but so what? Two things to think about: 

Imagine if insurance didn’t exist? How many of us would have the personal financial resources to recover if our house burned down or we crashed the car? Or, worse still, we crashed the car into our house causing a fire and injuring some passers-by in the process...? Would we be brave enough to set up in business or to travel abroad without a financial safety net? Insurance gives us security, peace of mind. It lets us live, work and play safe in the knowledge that, should disaster strike, we’ve paid an insurer to take the risk from us. We’ll be looked after. 

 

Any idea how much general insurance contributes to the UK economy every year? By general we mean non-life insurance, like property, motor, travel and liability. It’s massive. Not only in the income it generates but also because of the people it employs and the protection it gives individuals and businesses so they can operate and, in turn, generate wealth themselves.  

Today the UK’s one of the biggest insurance markets in the world. Of the 500 companies writing business here, about a quarter are life insurers and the rest deal in general cover. After Germany, we were the second largest European players in 2020 with a 14.55% market share worth US$114,858,000. That’s a lot in anyone’s money. And, as well as a huge domestic presence, there are lots of multinational companies providing cover across the world.  

Where do insurers put the hard-earned cash we’ve given them? In the UK they manage funds of roughly £2 trillion, investing in companies, stocks and bonds. They also pay nearly £12 billion in taxes to the government every year. And, let’s not forget the claims they settle. According to the Association of British Insurers (ABI), insurance companies processed £47.2M in property and motor claims every day in 2020. That’s an enormous amount of money for people to have to find down the back of the sofa…