History Of Insurance

The history of insurance is likely to date back to the very first human beings. In the ancient times, if a person's house was burnt down, the other members of the community helped to build a new one by contributing the necessary resources.

The history behind insurance can be traced to the early 3rd and 2nd millennia BC, where Chinese and the Babylonian traders practiced methods of risk transfer. The Chinese were famous for redistributing their wares across many vessels in order to limit their loss that might occur due to ship sunk while traveling through treacherous river rapids.

Babylonians also practiced insurance in the form of a system, called the Code of Hammurabi, c. 1750 BC. It was practiced by the early Mediterranean sailing merchants. When a merchant takes a loan to fund his shipment, he would also pay an extra sum to the lender to would guarantee him to cancel the loan when the shipment is stolen or lost at sea.

History of insurance shows how Achaemenian monarchs of Iran were the first to insure their people. They made it official by registering the process in government notary office. Insurance was like a ceremony to them and performed each year in Norouz, where the head of different ethnic groups presented gifts to the monarch. The people of Rhodes invented the concept of the 'general average'. Merchants whose goods were being shipped together would pay a proportionally divided premium which would be used to compensate any merchant whose goods were abandoned during storm or sinkage. This was an interesting phase in insurance history.

The Greeks and Romans introduced life and health insurance in 600 AD. They form an association called "benevolent societies" that took care of families and paid funeral expenses of members upon death. "Friendly societies" also existed in England in the late 17th century, where people donated funds to be used for emergencies.

The concept of separate insurance contracts was introduced by the people of Geneo in 14th century and the concept of marine insurance existed in a concrete form at the end of the 17th century.

Modern concept of insurance history can be traced to the Great Fire of London, 1666 which destroyed 13,200 houses. In 1680, Nicholas Barbon of England established the first fire insurance named 'The Fire Office' to insure bricks and frame homes. United State's first insurance company underwrote fire insurance and was formed in Charles Town, South Carolina, in 1732. Benjamin Franklin popularized the practice of insurance, particularly against fire in the form of perpetual insurance. He also established the Philadelphia Contributionship for the insurance of houses from loss by fire. Insurance has come a long way today.

Going through the history behind insurance will give you a deeper insight in insurance and as well as comprehend it as a whole.