Wealth

Part 15 - Insurance

https://www.youtube.com/watch?v=gM0zGhDQuOw 

Long before the invention of money, people helped one another in time of adversity by co-operated to defend their communities and built 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, when borrowing money, merchants should pay the lender an extra fee in exchange for a guarantee to cancel the loan should the shipment be stolen or lost at sea.

The Greek "Rhodian Sea-Law" require fellow merchants to reimburse a trader forced to jettison cargo to save his ship from sinking about 1000 BCE. An Athenian "maritime loan" regulation cancelled loans if a ship was lost and by the 4th century BCE, loan repayment rates varied according to the risk.

About 600 BCE, both the Greeks and Romans established benevolent societies, to pay funeral expenses and care for the families of deceased members.

Prior to the 17th century, in England, people donated money to "friendly societies" that used the money to help people with emergencies.

In medieval times, loans to a merchant on land were typically repaid with a share of the profits. By contrast, merchants took out sea loans with a high rate of interest to compensate the investor for the risks involved.

Pope Gregory IX condemned this practice as usury in 1236 and, until the 14th century, merchants had to buy bills of exchange from the lenders to cover loss at sea. The first written insurance contracts in Europe date back to 1343, in Pisa, Italy and by the sixteenth century, insurance was common in Britain, France, and the Netherlands.

In London, in the 1680s, Edward Lloyd opened a coffee house which became 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 insurance market Lloyd's of London in 1774.

By 1436, Venice and Barcelona laws required traders to settle insurance disputes using arbitrators and law courts. The first book on insurance by Pedro de Santarém written in 1488 and published in 1552.

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 Hamburg Fire Office was first fire insurance company in the world in 1676.

Property insurance in Britain started after the Great Fire of London, in 1666, which destroyed more than 13,000 houses. And, 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 for 135 years and played an important part in shaping fire fighting and prevention.

At first, each insurance company employed its own fire fighters to prevent and minimize the damage to properties insured by them. 'Fire insurance marks' were displayed above the door of each property so that the fire fighters could identify insured properties. Rival fire brigades often ignored burning buildings that were not insured by their company but eventually, the insurance companies supplied money and equipment to a municipal authority and firefighters responded to all fires. This was not entirely satisfactory as the brigades still tended ignore any fire at an uninsured building.

The first company to sell fire insurance in the USA was established in Charles Town, South Carolina in 1732. 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 the 'Amicable Society for a Perpetual Assurance Office', founded in London in 1706. Each member paid a fixed annual fee and at the end of each year some of this "amicable contribution" 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 4 pence a week to the scheme; the employer paid 3 pence, and general taxation paid 2 pence. Workers on sick leave received 10 shillings a week for the first 13 weeks and 5 shillings a week for the next 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, which expanded insurance to achieve individual financial security. This was improved after the Second World War with the Veterans Affairs Home Loan programs to provide affordable housing for veterans. Also, the GI life insurance policy program eased the burden of military deaths and injuries on the civilian population and survivors.

https://www.youtube.com/watch?v=IbhuV9xS8vc