History of Motor Insurance

Due to the appalling road skills and victims not being compensated, motorists had to start paying motor insurance:

(From talkonce.com)

“The Birth of the Motor Car
Motor vehicles made their first spluttering appearance at the turn of the 20th Century but during the first years there was no requirement or consideration for the need of Insurance in any form.

In the early years of motoring there seemed little need to consider the implications and requirements of insurance. In fact the first vehicles to hit the open road were so cumbersome and slow, the common horse and carriage was considered much more efficient and faster at the time.

As with any technology, interest soon developed and the motor vehicle was developed and improved at an alarming rate. Within a short space of time the future of the motor car was guaranteed and its future uses were being heavily considered.

Car Insurance During the First World War
By the time of the First World War in 1914 the motor car had developed dramatically and its role was considerable during the conflict.

As a result of the war, many people were trained to drive the vehicles used in action. The implications of this meant a dramatic increase of interest in the motor vehicle.

By the end of the First World War (1918) people were returning from the conflict with an interest to continue their driving experience.

Even at this stage in time, no compulsory requirement for motor insurance existed.

The price of a motor vehicle was certainly out the price range of the common man until the availability of hire purchase in the 1920’s.

Hire purchase suddenly opened the gateway for many to afford their own motor vehicles and within a short space of time; they became a common sight on the roads of Britain.

Road Traffic Accidents
Due to the poor standards of driving skills and little road discipline, accidents soon became a common sight on the roads of Britain.

A situation soon became apparent in the fact that many who had taken on the cost of buying their own vehicles were now finding themselves out of pocket if their vehicles were damaged or destroyed.

The other side to this was the total lack of compensation for those innocent victims involved in these road traffic accidents, this situation led to the introduction of the first ‘Road Traffic Act’.

By 1930 the situation had escalated to such proportions that the government of the time introduced the first ‘Road Traffic Act’.

In basic form the Road Traffic Act made it compulsory for vehicle owners and drivers to be insured for their liability for injury or death to third parties whilst their vehicle was being used on a public road.

Motor Insurance had appeared sometime before this but it had not been compulsory.

Composite Insurers
(beginning to mid 20th Century)

Large ‘Composite’ insurers were dealing with most of the motor insurance business being handled at his time.

During the 2nd World War there was a dramatic reduction in business due to the massive petrol shortages and the recruitment of so many into action.

Unlike the First World War, which saw a revolution in the development of the Motor industry, this War had an adverse effect on the motor industry and the motor insurance market, which established itself over the last 9 years.

The Second World War ended in 1945 and it appeared as though time had stopped because the motor insurance market picked up where it had left off in 1939.

Broking had become big business and the development of financial services allowed customers the simplicity of being able to spread their costs with easy payment schemes.

Insurance in the 1970’s
The expansion and growth of the motor insurance market seemed endless until a significant day in 1971.

On the 2nd of March 1971 the largest insurer of the day ‘Vehicle and General’, owned by Dr Emile Saundra, collapsed overnight. At this time there had been a severe winter and Vehicle and General endured massive claims as a result of the careless regard for the risks they were underwriting from all the High Street Brokers.

Suddenly the general public found themselves in an unbelievable situation. All those who had taken policies with the Vehicle and General were now without cover and the High Street Brokers were besieged with business to replace the cancelled policies. You might have expected the customer to take out their frustration on the Broker, but the Broker actually thrived from the situation. There were that many people insured with the Vehicle and General at the time it collapsed, that the 2nd of March became very significant for the insurance world. Customers taking out new policies besieged brokers and for many Years to come March became the busiest period of the year.

During the 70’ and 80’s the High Street Brokers thrived and many household names became well established, for instance, ‘Swintons’, who were originally started in Swinton, Manchester.”


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