Car Insurance in England, Scotland and Wales was until 1988 regulated primarily by the Road Traffic Act 1972 as amended by the Road Traffic Act 1974. The 1974 Act came into operation on 1 January 1975.
These Acts not only deal with insurance but also with many aspects of the road law. Part VI of the 1972 Act relates particularly to compulsory third party car insurance.

In 1988 the law was revised and the new Road Traffic Act was implemented with compulsory car insurance requirements

Section IV states:

143.—(1) Subject to the provisions of this Part of this Act—
(a) a person must not use a motor vehicle on a road unless there is in force in relation to the use of the vehicle by that person such a policy of insurance or such a security in respect of third party risks as complies with the requirements of this Part of this Act, and
(b) a person must not cause or permit any other person to use a motor vehicle on a road unless there is in force in relation to the use of the vehicle by that other person such a policy of insurance or such a security in respect of third party risks as complies with the requirements of this Part of this Act.

In accordance with the requirements of the Road Traffic Act 1988 and the Motor Vehicles Compulsory Insurance Regulations 1987 all users of Cars on roads in the UK must be insured with an authorized Insurer who is a member of the Motor Insurers Bureau - against liability at law in respect of death and bodily injury to another person including passengers, or damage to property, and also to the cost of any emergency treatment resulting from the accident including the cost of the emergency services.

You can read more about the RTA online at http://www.opsi.gov.uk