In times of adversity, long before the invention of money, people co-operated to build communal granaries as insurance against a bad harvest. In the 3rd millennia BCE, Chinese merchants, negotiating river rapids, distributed their merchandise in several boats in case one of them capsized. About 1750 BCE, the Babylonian king, Hammurabi, decreed that merchants should pay an extra fee in exchange for a guarantee to cancel a loan should a shipment be stolen or lost at sea.
By the 4th century BCE, an Athenian "maritime loan" regulation cancelled loans if a ship was lost and the Greek "Rhodian Sea-Law" about 1000 BCE, require fellow merchants to reimburse a trader forced to jettison cargo to save his ship from sinking.
In medieval times, sea loans paid a high rate of interest to compensate the investor for the risks involved, a practice that Pope Gregory IX condemned as usury in 1236. This forced merchants to buy bills of exchange from the lenders, to cover losses at sea, until the 14th century.
Written insurance contracts date from 1343, in Italy, and by the sixteenth century this was common in the Netherlands, Britain and France.
By 1436, Venice and Barcelona laws required traders to settle insurance disputes using arbitrators and law courts. The first book on insurance was written by Pedro de Santarém and published in 1552.
In London, Edward Lloyd's coffee shop was a popular meeting place for ship owners, merchants, ships' captains and investors willing to underwrite trading ventures. These informal beginnings led to the establishment of the Lloyd's of London insurance market in 1774.
About 600 BCE, both the Greeks and Romans established benevolent societies, to pay funeral expenses and care for the families of deceased members.
Before the 17th century, in England, people donated money to "friendly societies" to help people with emergencies.
Early in the 17th century, Robert Hayman mentioned two "policies of insurance" in his will. One was a policy on his life for one hundred pounds sterling.
The first fire insurance company in the world was the Hamburg Fire Office in 1676.But property insurance in Britain started after the Great Fire of London, in 1666, which destroyed more than 13,000 houses. In 1681, the "Insurance Office for Houses" insured 5000 homes.
The Hand in Hand Fire & Life Insurance Society, founded in 1696, operated its own fire brigade and played an important part in shaping fire fighting and prevention for 135 years.
At first, insurance companies employed their own fire fighters. Marks were displayed above the door of each insured property so that the fire fighters could identify them. Rival fire brigades often ignored burning buildings that were not insured.
Eventually, the insurance companies supplied money to municipal authorities and firefighters responded to all fires.
In 1752, Benjamin Franklin founded the Philadelphia 'Contributionship for the Insurance of Houses from Loss by Fire.'
The world's first life insurance company was founded in London in 1706. Each member paid a fixed annual fee and at the end of each year some of this was divided among the wives and children of deceased members, in proportion to the amount of shares the heirs owned.
James Dodson, a mathematician and actuary, tried to form a company where premiums were based on each age group. Edward Rowe Mores used Dodson's mortality tables to establish the 'Society for Equitable Assurances on Lives and Survivorship' in 1762.
The Presbyterian Synods in Philadelphia and New York founded the 'Corporation for Relief of Poor and Distressed Widows and Children of Presbyterian Ministers' in 1759.
The first accident insurance was provided by the 'Railway Passengers Assurance Company' founded in 1848 to insure against the increasing number of fatalities on the new railway system. The company charged higher premiums for second and third class travel because of the greater risk of injury in the roofless carriages.
In the 1880's, Chancellor Otto von Bismarck introduced old age pensions, accident insurance and medical care that formed the basis for Germany's welfare state.
The Liberal government of Britain, led by H. H. Asquith and David Lloyd George, introduced The 1911 National Insurance Act which gave the British working classes the first contributory system of insurance against illness and unemployment. All workers who earned less than £160 a year had to pay into the scheme that was subsidized by the employer and general taxation. Workers on sick leave received 10 shillings a week for the first 13 weeks.
By 1913, 2.3 million people were insured under the scheme for unemployment benefit and almost 15 million insured for sickness benefit.
The United States federal government passed the Social Security Act in 1935. After the Second World War, this was improved with the Veterans Affairs Home Loan programs. the GI life insurance policy program also eased the burden of military deaths and injuries.
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