INTERNATIONAL INSURANCE & REGULATION
Compulsory insurance definition
Compulsory insurance is insurance that must be purchased to comply with legal, professional or regulatory requirements in a specific jurisdiction.
In practice, this means any insurance that must be purchased in order to comply with the law. The term may also apply to insurances set by a professional or regulatory body. Compulsory insurances may relate to personal lines for local people, for example compulsory third party motor. This gives insurers, brokers, reinsurers and risk managers a shared way to discuss the concept when reviewing policies, claims, regulation or market data.
This term is especially useful in insurance market analysis, policy wording and risk transfer decisions. It helps users interpret insurance terminology consistently across markets, policies and risk data. It also helps users compare how insurance is structured, regulated, priced or claimed across different markets.
Compulsory insurance is closely related to admitted insurer, local regulation, employers’ liability and motor liability. Linking these concepts together helps build a clearer glossary structure and gives readers a stronger understanding of how individual insurance terms connect within wider international insurance practice.
At a glance
- Used in
- Insurance market analysis, policy wording and risk transfer decisions.
- Purpose
- Helps users interpret insurance terminology consistently across markets, policies and risk data.
- Important because
- Local insurance regulation can change whether a policy is valid, compliant or acceptable in a given market.
- Related terms
- admitted insurer, local regulation, employers’ liability and motor liability.
Example of compulsory insurance
A jurisdiction requires employers to buy workers’ compensation insurance. A business operating in that market must arrange the compulsory insurance before it can trade compliantly.