The History of Insurance

The history of the insurance business is really quite phenomenal. It has been around for thousands of years. The earliest form of insurance among caravan troupes goes as far back as 2000 BC. These caravans travelled Babylonia and neighbouring countries and jointly shared their losses, mostly due to theft. We know from old documents that in ancient Egypt widows and orphans were given financial assistance. That can definitely be called a form of life assurance. The first insurance policy was for marine insurance. It dates back to the 13^th century in Genoa & Palermo. The first life assurance policies originated in the 16th century. The first proper policy document can be traced back to the 1580\’s.

After the fall of the Roman Empire (ca. 395 AD) the insurance business came to a standstill. This can be attributed to the fact that the church took upon itself all forms of social work and welfare assistance during that time. But it re-established itself more than 1500 years later with the founding of the two significant societies. The ‘Society of Widows & Orphans’ came about in 1699 and the ‘Amicable society for a Perpetual Assurance’ in 1705. After that various other guilds were formed. These guilds were professional associations, i.e. fellowships of actuaries, for people practising the same trade. Their main object was the promotion of the interests of all members and their families.

In 1530, 30 sworn insurance brokers sold policies. They were underwritten by London merchants. In 1712 the company became known as Lloyd\’s, as the brokers used to meet in the Edward Lloyd\’s coffee shop to exchange information. In 1588, life assurance policies were issued and for people between 12 and 45. What is rather remarkable is that the premium was the same, irrespective of the assured’s age.

The first Death in Service policy was launched in 1852 by Provident Clerks Mutual Benefit Society. They started in 1846 and later merged with General Accident.

Norwich Union began business in 1797 and was known as Norwich Union Fire Insurance Society. They specialised in fire insurance, as the name already gives away. The British insurance companies that offered fire insurance were known as ‘Fire Societies’. Their business was limited to the city of London. The insurers owned all the fire stations. In 1929 the last fire brigade changed ownership and was placed under municipal control.

The Building & Contents insurance started in the early 1720\’s. Street names and house numbers were quite chaotic in those days, so insurance companies placed metal plates or marks to buildings and houses they insured. In the 1840\’s the postal system was introduced, which took care giving houses and buildings proper addresses.

Winston Churchill was a great advocator for insurance. He said that every household should have ‘insured’ written on their front door. In 1911 Churchill helped draft the National Insurance Act.

Today most life assurance is issued to replace the salary of the main breadwinner and to avert reclaiming of properties due to long illness/injury. Financial planning and insurance has become an important aspect of today’s lifestyle.