The first written policy appeared in Hammurabi's Code. Find out how it evolved from there.
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History of Insurance
“If risk is like a smoldering coal that may spark a fire at any moment, then insurance is our fire extinguisher.” (Beattie)
“Countries and their citizens need something to spread risk among large numbers of people and to move risk to entities that can handle it. This is how insurance emerged.” (Beattie)
“The main concept of insurance - that of spreading risk - has been around as long as human existence. Whether it was hunting giant elk in a group to spread the risk of being the one gored to death or shipping cargo in several different caravans to avoid losing the whole shipment to a marauding tribe, people have always been wary of risk.” (Beattie)
The first ever recorded written insurance policy appeared on a Babylonian obelisk monument with king hammurabi’s code carved into it. the Hammurabi code was one of the first forms of written law. This was a very old law but it still gave basic insurance in that a debtor didn't have to pay back his loans if some personal catastrophe made it impossible.
“In the dark and middle ages, most craftsmen were trained through the guild system. Apprentices spent their childhoods working for masters for little or no pay. Once they became masters themselves, they paid dues to the guild and trained their own apprentices. The wealthier guilds had large coffers that acted as a type of insurance fund. If a master's practice burned down, a common occurrence in the wooden hovels of medieval Europe, the guild would rebuild it using money from its coffers. If a master were robbed, the guild would cover his obligations until money started to flow in again. If a master were suddenly disabled or killed, the guild would support him or his widow and family. This safety net encouraged more and more people to leave farming and take up trades. As a result, the amount of goods available for trade increased, as did the range of goods and services available. The style of insurance used by guilds is still around today in the form of "group coverage".” (Beattie)
“A basic system for funding voyages to the new world was established. In the first stage, merchants and companies would seek funding from venture capitalists. The venture capitalists would help find people who wanted to be colonists, usually those from the more desperate areas of London, and would purchase provisions for the voyage. In exchange, the venture capitalists would be guaranteed some of the returns from the goods the colonists would produce or find in the Americas. It was widely believed that you couldn't take two left turns in America without finding a deposit of gold or other precious metals. When it turned out that this wasn't exactly true, venture capitalists still funded voyages for a share of the new bumper crop: tobacco.” (Beattie)
“Not content with the titles of statesman, scientist, inventor or author, Benjamin Franklin added insurer to his collection. In 1752, the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire became the first mutual fire insurance company in America. Much like London in the 1600s, houses at this time were made almost entirely out of wood. Worse yet, the settlements that grew into the cities were built close together. This was originally done for security reasons but as cities grew, developers built homes very close to each other for the same reasons they do today - to fit as many homes as possible on their development plots.” (Beattie)
“The Philadelphia Contributionship for the Insurance of Houses from Loss by Fire set new standards for building houses because it refused to insure houses that were considered fire hazards. The criteria they used to evaluate buildings would one day be reworked into both building codes and zoning laws. Seven years later, Franklin was also instrumental in getting the first life insurance company, the Presbyterian Ministers' Fund, off the ground.” (Beattie)
“The various religious authorities at the time were outraged at the practice of putting a value on human life, but criticism cooled when it was seen that insurance worked to protect widows and orphans. The industrial revolution then brought the necessity of both business insurance and disability insurance to the forefront. Throughout history, the types of insurance offered have been expanded in reaction to new risks. 1864 saw the Travelers Insurance Company sell its first accident policy. 1889 saw the first auto insurance policy. As time progressed, new types of insurance were blooming along with the risks of an increasingly modern life.” (Beattie)
“Insurance is always in demand because people and businesses are always looking for ways to minimize risk. Because of the demand and the range of insurance policies available, insurance policies have increasingly become investments in and of themselves. Because the level of insurance concentrated in urban centers could lead to huge losses and chaos in the insurance industry if a mega-disaster - or even a succession of regular disasters - occurred, the insurance industry has begun to repackage its risk in catastrophe-linked securities that trade on the market and mitigate insurers' risk.” (Beattie)