“Don’t put all your eggs in one basket” is a very old saying and, in many ways, it’s still the basis for the modern insurance that helps protect your business. Insurance began with people seeking to control the dangers they faced by spreading out the risk among larger groups of people and making agreements to help one another in the case of a loss.
It’s an interesting story how this practice got its start and how it led to the products and services today that help businesses protect themselves. Here’s a brief history of insurance.
History of Insurance: Ancient Insurance
The problems that insurance is designed to address have been around for a really long time. Seafaring in the ancient world was a notoriously dangerous task for traders, from Ancient Babylon all the way to China. To mitigate losses, shipments of goods would be divided among several ships in case one was pirated or lost at sea.
The earliest known written insurance agreement appears on a Babylonian monument dated to around 1750 BC and known as the Code of Hammurabi. Merchants taking out loans could pay an extra fee for a guarantee of certain benefits. Terms stipulated that a lender should waive the interest due in the event of a shipwreck or cancel the whole debt in the event of the shipment’s theft.
Societies and Guilds
Attention later turned to helping people in need. Classical Greeks and Romans invented an early form of group life and health insurance they called benevolent societies. The societies would take up collections to care for the families of those who became ill or died.
The insurance functions of benevolent societies were eventually taken over by craftsmen guilds in the Middle Ages. Funds were collected and used when a member was disabled or killed to support them or their surviving family. Guilds also maintained funds to help members get back on their feet after thefts and fires.
History of Insurance: Insurance Companies
Insurance practices became more organized as time went on. Merchant marine insurance split off from loans and contracts into a distinct business with the first real insurance policy issued in in Genoa in 1347. Many more followed.
By the 1600s, insurance companies began to form. The famed Lloyd’s of London insurance brokerage got its start in Edward Lloyd’s London coffeehouse, a meeting hub for merchants and ship owners. After the Great Fire of London that destroyed much of that city in 1666, Nicholas Barbon started a business offering fire insurance.
Insurance in America
Insurance crossed the ocean to the New World in the 1700s, while the states were still colonies. Founding Father Benjamin Franklin cofounded the Philadelphia Contributorship in 1752, as America’s first fire insurance company. The company helped set new safety standards to meet its insurance requirements as new buildings were constructed.
Franklin also helped the Presbyterian Ministers’ Fund offer life insurance in 1759. The policy was controversial at first and seen as putting a value to human life, but was soon accepted for the protection it provided to widows and orphans. Various kinds of insurance policies from other companies and groups soon followed.
History of Insurance: Modern Insurance
Insurance in modern times has tracked very closely to new innovations and historical developments. The first auto policy was issued in 1898, only a few years after the invention of the automobile. Aviation insurance was introduced in 1912, a few years after the first flight.
Many of the key insurance products businesses are familiar with date from the first half of the 20th century. Employers’ liability and workers’ compensation insurance first appeared in 1911, while the Social Security Act of 1935 provided the first grants to states in what was to become unemployment insurance. The first group life and health insurance policies came a few years later during WWII.
Much of the history of insurance is even more recently written. The first types of mandatory insurance only appeared in the 1930s, with car insurance only becoming mandatory in most of the country in the 1970s. Hawaii introduced the first law requiring employer-paid healthcare coverage in 1974, while Massachusetts was the first to establish a statewide health insurance exchange in 2006. Another step in modernizing insurance came when the Affordable Care Act was first signed into law in 2010.
Today, the history of insurance is still being written, and Lockton Affinity is fortunate to be a part of the story. Fresh out of college, Jack Lockton founded Lockton Insurance in 1966, which has grown to become a world leader in the industry. Since 1987, Lockton Affinity has been creating unique and proprietary insurance solutions for member-based organizations just like yours, while the next chapter of insurance history is yet to be written.