The advantages of compulsory insurance Some compulsory insurance can reduce the running cost and increase the efficiency of the society.Take the motor insurance for example.Car accidents are really common in every country,the motor insurance can simplify the compensation process and increase the efficiency of society.On the one hand, the third party will get compensation from insurance companies,which is much more reliable(since the insurance company will not disappear suddenly) and will compensate automatically.I mean they will get contacted with victims. On the other hand,the first party does not need to negotiate with the first party and just need to provide the picture of the accident and your details.This process sounds really nice, However most drivers are pretty confident in their diving,therefore they will not buy motor insurance if it is not compulsory.And actually they must overestimate their driving skills,so compulsory insurance is really necessary to reduce the running cost and increase the efficiency. And if two insurances schemes are same,compulsory one will be cheaper.On the one hand,due to economies of scale, the expense of the compulsory insurance is lower,because customers will go to insurance company and buy it,which will reduce commission fees.On the other hand,every insurance company will provide such insurance contracts,because no company insurance wants to give up such large market(compulsory insurance means large amount of people need it).And because of the competition of insurance companies,they will try to provide lower price and higher quality to attract customers.All in all,the premium must be lower.