Sure, but if the lenders find themselves out of pocket because insurers repeatedly refuse to pay, they will change behaviour too - such as by no longer lending.

Sure, but if the lenders find themselves out of pocket because insurers repeatedly refuse to pay, they will change behaviour too - such as by no longer lending. Also, no such requirement in the U.K. - 3rd party vehicle insurance is mandatory, but home insurance is up to you - no lender I’ve ever had has mandated it.