History Of Insurance
The history of insurance is as old as time. People cared about Risk from earliest times. The ancient Chinese and Babylonian traders initiated the first methods of transferring and distributing risk around 3rd millennia BC.
The famous Code of Hammurabi written in 1754 BC is the first written document which regulates insurance. If traders were robbed the rulers were reimbursing them for the stolen goods.
Around 800 BC, in Rhodes groups of merchants started paying to insure their goods being shipped together. The collected funds would be used to reimburse any merchant whose goods were damaged during transport.
The use of insurance in Europe increased with the rise of trade and commerce in the late medieval period. In 1310 the Chamber of Assurance was established in the Belgian commercial city of Bruges.
As a result insurance awareness was raised and property insurance as we know it today can be traced back to 1681. The economist Nicholas Barbon and eleven associates established the first fire insurance company – “Insurance Office for Houses,” which insured 5,000 homes in the first few years of operation.
Edward Lloyd opened a coffee house, in the late 1680. This became a meeting place for all parties in the shipping industry. Some wanted to insure cargoes and ships, and some were willing to underwrite such ventures. These informal beginnings led to the establishment of the insurance market Lloyd’s of London.
Credit for the development of the actuarial science goes to Blaise Pascal in 1650. This increased the demand for long-term insurance coverage such as burial, life insurance, and annuities.
These long term coverages required that money be set aside to pay future benefits, such as annuity and death benefits many years into the future.
The first company to offer life insurance was the Amicable Society for a Perpetual Assurance Office.
The Railway Passengers Assurance Company was the first company to offer accident insurance in 1848 in England.
The first pension system in the history of insurance was developed in the Roman Empire. It was called Collegia and some of the calculations developed in the 3rd century were still in use until the 19th century.
In 19th century governments began to initiate national insurance programs. The first Chancellor of Germany Otto von Bismarck in1880s introduced old age pensions, accident insurance and medical care.
The Cologne Reinsurance Company was the first registered reinsurance company in 1852. Within a decade one of the biggest insurance companies and global risk providers SwissRe was established and wealth management firms such as Virobel.
It is mainly during the 20th century that the insurance become an institutionalized activity. The evolution of the business increased government involvement. The development of the mandatory insurance and the building of the whole economical system that we call insurance was done in the mid 20 century.
However today change is just around the corner. With the digital transformation the insurance industry is expected to be heavily disrupted. If you want to read how the insurance disruption will happen, what insurance and reinsurance software solutions will matter – follow Reinsurance Weekly.