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HMRC internal manual

General Insurance Manual

The UK insurance market: the domestic market

The UK market for general insurance can be split into two areas, the domestic insurance market and the London market. The London Market is further split into Lloyd’s and the Company Market.

The domestic market is a direct insurance market split between a mass market, dealing for example with the needs of individual house-holders and motorists, and a more specialist market catering for the more sophisticated needs of the business community and offering cover for all manner of commercial and financial risks.

The London Market is largely international and on a larger scale, incorporating reinsurance. But there is an element of overlap; for example Lloyd’s has syndicates that write motor business which is largely domestic. More detail in GIM1230.

Companies may operate through brokers or agents, through a direct sales force, or direct with the policyholder through the mail, telephone or Internet. A private policyholder, then, may obtain cover in a variety of ways, directly from insurance companies operating through a network of branches or agents, or indirectly through a broker from either a corporate insurer or a Lloyd’s syndicate. Lloyd’s business must be placed through authorised Lloyd’s brokers. Prospective policyholders cannot approach a Lloyd’s syndicate directly, though some motor syndicates run their own distribution chain.

Small commercial risks may be handled in much the same way as private risks. A large commercial concern with complicated needs is likely to have its own insurance department and/or risk manager who will assess the concern’s insurance needs, including the extent to which risk should be retained. Large groups may operate their own captive insurer – see GIM11000.

Apart from compulsory motor insurance, UK residents are free to obtain insurance from insurers outside the UK, and since 1 July 1994 there has been a single market in insurance throughout the EEA with no national boundaries.