Igniting Protection: A Sparkling History of Insurance
Insurance is like a safety net, it’s here to protect us from sudden and unexpected problems that might cause financial hardship. The idea of sharing risk, which is at the heart of insurance, has been around since humans first started to form communities.
Ancient Beginnings: Hammurabi’s Code
Insurance can be traced back to ancient times, specifically to 18th century B.C. The Code of Hammurabi, an ancient law code, had a rule that was much like an insurance policy: if a person couldn’t repay a loan due to personal disasters like disability, death, or flooding, they were freed from their debt.
Middle Ages: The Role of Guilds
During the Middle Ages, guilds (associations of craftsmen) served as an early form of insurance. These guilds had funds to help members who faced hardships. For instance, if a craftsman’s workshop was destroyed by fire, the guild would help rebuild it. This practice encouraged more people to pursue crafts, leading to an increase in trade and the development of group insurance.
Marine Insurance: Shipping and Underwriting
In the late 1600s, as sea voyages became more common, insurance started to play a significant role in shipping. The idea of underwriting, or signing up to share in the financial risks of these voyages, was born in the London coffeehouses. This practice involved multiple people taking responsibility for a portion of a ship’s cargo, spreading the risk among many.
Advances in Insurance: Probability and Fire Insurance
In the 17th century, the understanding of risk was enhanced by the mathematical work of Blaise Pascal and Pierre de Fermat, who developed a way to calculate probabilities. This made insurance more affordable. Following the Great Fire of London in 1666, fire insurance companies were formed to protect against the devastating effects of such disasters.
Life Insurance: A New Protection
Life insurance started to appear in the 16th and 17th centuries in England, France, and Holland. The first known life insurance policy in England was issued in 1583. But many early insurers failed due to the inability to properly assess risk. The situation improved when Edmund Halley, known for Halley’s Comet, developed the first modern mortality table in 1693.
Insurance in America
While insurance flourished in Europe, it took over 100 years for it to establish itself in America, starting around the 1750s.
A Recap: Insurance History
Insurance has been around in various forms for thousands of years, with some of the earliest forms of insurance being contracts between Babylonian merchants around 3,000 to 4,000 BCE. These contracts protected against the loss of goods at sea.
The World’s Oldest Insurance Company
The oldest insurance company in the world is Hamburger Feuerkasse, founded in 1676 by two members of the Grand Duchy of Baden.
The Role of Insurance
In summary, the history of insurance is long and complex. It’s played a crucial role in protecting people and businesses from financial loss for thousands of years. Although it can be costly, it’s an essential part of modern life, offering financial protection against many types of risk.
