How Insurance Came to be

Insurance spells safety and money. In fact, a lot of people would opt to be insured or have their properties and future insured. Insurance is a system of protection against loss under which a party agrees to pay a certain sum (premiums) for a guarantee that they will be compensated under certain conditions for loss or damage [www.shipping.francoudi.com/main/main.asp].

Insurance is becoming a necessity nowadays. Insurance covers everything — from tangible to non-tangible assets. But do you have any idea as to how insurance came to be?

Shipping/Travel Insurance

Early methods of insurance were already practiced by the Chinese traders around the 3rd millenia and by the Babylonian traders around the 2nd millenia.

How is this done? Chinese merchants travelling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel’s capsizing.

On the other hand, the Babylonians developed a system which was recorded in the famous Code of Hammurabi, 1750 BC, and practised by early Mediterranean sailing merchants — if a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender’s guarantee to cancel the loan should the shipment be stolen.

Personal Insurance

The first to insure people and made it official by registering the insuring process in governmental notary offices was the Achaemenian monarchs of Iran. Special gifts worth more than 10,000 Derrik (Achaemenian gold coin) gets to be presented in a special ceremony and registered in a special office.

According to Jahez, a historian and writer, wrote in one of his books about ancient Iran: “[W]henever the owner of the present is in trouble or wants to construct a building, set up a feast, have his children married, etc. the one in charge of this in the court would check the registration. If the registered amount exceeded 10,000 Derrik, he or she would receive an amount of twice as much.”

Health and Life Insurance

The ones who originated the health and life insurance were the Greeks and Romans dating way back 600AD, when they organized guilds called “benevolent societies” which cared for the families and paid funeral expenses of members upon death.

Building/Structural Insurance

Building insurance as we know today originated from the Great Fire of London, which in 1666 devoured 13,200 houses. It was Nicholas Barbon who opened an office to insure buildings. In 1680, he established England’s first fire insurance company, “The Fire Office,” to insure brick and frame homes.

Marine and Specialist Insurance

As for marine and other specialist types of insurance, it was Edward Lloyd who initiated this one in the late 1680s. He opened a coffee house that became a popular haunt of ship owners, merchants, and ships; captains, and thereby a reliable source of the latest shipping news. It became the meeting place for parties wishing to insure cargoes and ships, and those willing to underwrite such ventures.

It is true that insurance appears simultaneously with the appearance of society. It is all the more true that insurances came to be after accidents and/or tragedies happened. It’s good to see that societies learned from their mistakes. It is through those mistakes that we learn to build something we can all benefit and insure our temporary existence from.