L'industrie des assurances - étude en anglais

THE INSURANCE MARKET PLACE

A General Structure of the Market

B Buyers

C Intermediaries (or Middlemen)

D Sellers (or Suppliers) of Insurance

E Transaction of Business at Lloyd’s

F Organisational Structure of Insurance Companies

G Marketing Associations

H Specialist Consultants

I Treaty of Rome and EU Directives

J Insurance Markets in Other Countries

Summary

Learning Objectives

After studying this chapter, you should be able to:

List the main participants in the insurance market and be able to define their role

Outline the size of the insurance market, in terms of premiums received and numbers of policies written

Describe the structure of Lloyd’s and how its members transact business

Describe the various forms of insurance company and their organisational structure

Outline the organisations representing the various sections of the insurance market

Outline the rights of establishment and freedom of services under the Treaty of Rome and EU Directives

Describe the structure of the insurance markets in the principal industrialised nations

Outline the role and function of specialist consultants, including risk management consultants

A General Structure of the Market

We have already talked about the role of insurance and the valuable function it performs. The actual technicalities of transacting insurance are the subject of a later chapter, but in the meantime let us concentrate on the mechanisms by which buyers and sellers are brought together.

The place where any buyer and seller meet is normally referred to as a market place. When we talk about a market place, we think of a Saturday market in a country town, a cattle market or some similar meeting place. Most of us have seen pictures in books, or in the media, of markets being held for the sale of grain, tobacco leaf, or stocks and shares. We often seek television pictures from within some of the financial markets, indeed these locations have even been the backdrop for television and feature films.

However, in the market for insurance there is no single place where the buyers and sellers and middlemen meet to transact insurance. The insurance market place refers more to the mechanism by which buyers and sellers come together, rather than a physical location. There is one exception to this general statement and that is the transaction of insurance business at Lloyd’s, which will be discussed in full al little later. Suffice it to say at the moment that the organisation of the Lloyd’s market is unique in the world, although a number of Lloyd’s type markets have been attempted in other countries.

A.1 Insurance as a Service Industry

Like any other market, the insurance market comprises:

Sellers: Insurance companies and Lloyd’s underwriting members

Buyers: General public, industry and commerce, and public authorities

Middlemen: Insurance brokers, agents, and consultants

In other markets the buyers, sellers and perhaps the middlemen can come together to examine the merchandise which is to be the subject of the sale. With insurance it is not possible to bring a house, factory or ship to a market place, and in any event what is being insured is the financial interest in that asset or a potential lawsuit which is at risk.

The buying and selling of insurance takes place every hour of every working day and contracts are arranged as and when required, at a place convenient to the individual parties concerned. As was seen in chapter 2 when discussing the functions of insurance, the insurance market is providing a financial service. It is a service industry in that it is supportive to industry producing goods or services.

The structure of the market is shown in figure 8.1

This diagram outlines the various components of the market place, but it does not give any indication of the size of the market.

A.2 Key Facts

The Association of British Insurers is a valuable source of up to date information on the state of the UK insurance market. Students are encouraged to check for themselves at the ABI website http://www.abi.org.uk. We have reproduced below some of the key facts.

A.2.A The UK Insurance Industry

The UK insurance industry:

Is the largest in Europe

Is the third largest in the world

Employs 360,000 people, a third of all financial services jobs

Accounts for over 20% of investment in the stock market

Pays out £240 million a day in pension and life insurance benefits and £45 million a day in general insurance claims

A.2.B Structure of the UK Insurance Market

Eight hundred and eight insurance companies are authorised, either by the UK or by another European Economic Area Member, to carry on insurance business in the UK.

Almost 600 of these can carry on general business only (such as motor, household and commercial insurance), 160 are authorised for long-term business only (such as life insurance and pensions) and 56 are composites (able to do both).

The largest ten motor insurers handle 87% of that business. Similarly, the largest ten property insurers account for 85% of the market.

The long-term insurance market (life insurance, pensions and savings) is not so concentrated. The largest ten companies account for 68% of the market.

A.2.C UK Insurance Business (Excluding Lloyd’s)

General insurance business

Total net premiums £26.4 billion

...