To transact insurance business of any particular class a company requires authorisation by the Department of Trade. The Department currently authorises over 800 companies but it should not be supposed that there are that number of competitors for any given insurance. Some companies confine themselves to life insurance, while others may or may not transact any. Companies may either transact many classes of general (non-life) insurance or else specialise in one class such as aviation insurance. Just as banking is dominated by the 'big four' banks - Barclays, Lloyds (unconnected with the insurance Lloyd's), Midland and National Westminster, the bulk of the business in general insurance is written by less than a dozen companies or groups of companies which also transact life insurance though their share of that class is smaller. Companies writing most classes of insurance are known as composite companies. The 'big 12' composite groups are, alphabetically:
Guardian Royal Exchange
Legal and General
Sun Alliance and London.
All of them are either more than 100 years old or include constituent companies established over a century ago. They have a network of branches throughout the United Kingdom and employ over 100,000 people. They are also active overseas through branches and associated companies, especially in general insurance. Some indeed, especially those active in North America, do more business abroad than at home. The Prudential is the largest in terms of funds and number of employees (22,000).
Three of the companies listed above rose to their present eminence on the basis of industrial life insurance, described elsewhere in the website. The others do not transact that class of business. Industrial insurance is also conducted by half a dozen smaller companies and by some friendly societies, known as collecting societies, which have no shareholders but are conducted for the benefit of their members.
For nearly 200 years until the 1870s the prime business of Lloyd's was marine insurance but about 100 years ago underwriters began to insure other risks such as fire insurance on property on land.
Later they extended their activities to many other classes of insurance including liability and motor. Lloyd's underwriters, because of the flexibility that individuals, as distinct from companies, can exercise, have often pioneered new classes of insurance which the companies were originally unwilling to undertake. Examples are the insurance of household goods against theft, and aviation insurance.... see: Modern Developments
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