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Chapter 2 The insurance market 2/3

Figure 2.1: Information flow
Reinsurance Insurance
Buyers Chapter

Intermediaries 2

Insurers

Reinsurers

A1 Buyers

The buyers of insurance can be divided into five main types:
• private individuals;
• partnerships;
• companies;
• public bodies; and
• associations and clubs.
A1A Private individuals

Many people buy insurance in a private capacity, ranging from a life assurance policy which pays out on Reference copy for CII Face to Face Training
death of the policyholder through to pet insurance designed to pay out if the family cat or dog is in an
accident. It is probably fair to say, however, that most expenditure on insurance is spent on household
buildings and contents insurance and motor insurance.

A1B Partnerships
Partnerships do not have a separate legal existence (unlike a company), and so each partner is jointly
Partnerships do not
and severally liable. Partnerships are most commonly found in the medical, veterinary and legal have a separate legal
professions and their insurance needs, especially in the area of professional negligence (poor existence
professional advice that leads to loss), tend to be catered for by specialist schemes.

A1C Companies
The range covered by this category extends from the very largest multinational corporation to the
smallest company perhaps operating from home. Unlike partnerships, limited liability companies have a
separate legal existence from those who own the company.

A1D Public bodies
Many public bodies, including local authorities and schools, are major buyers of insurance. In some
cases, they may be large enough to have set up their own insurance fund to insure some risks they face,
while turning to the insurance market to cover other much larger ones.
A1E Associations and clubs

There are many associations and clubs and all will have some insurance needs. Whether it is the local
football club or the local stamp collecting society, the management team or organisers will usually buy
insurance cover for liability risks and damage to owned property. They may also act for members by
arranging group covers or schemes. In legal terms, these unincorporated associations have special
requirements because, theoretically, each member is liable for the association’s actions. This is why,
when policies are issued for such organisations, you will see that the name for insurance purposes tends
to be expressed as ‘The committee and members for the time being of…’.