History of Insurance

 History of Insurance

Through the centuries, people everywhere have gone to great lengths to attain and retain a high degree of personal SECURITY-financially and emotionally.

This security is derived from many sources, but it fundamentally comes from a family-unit and being able to provide financially to maintain a certain standard of living or lifestyle.

With security comes a certain degree of peace of mind and freedom from doubt, fear, worry, or apprehension.

Inherent with security, however, comes the uncertainty of loss, or RISK, as a result of uncontrollable potential occurences that are common to everyone everywhere.

These include Death, Disability, Sickness, Accidents, Property Damage or Loss, and the financial difficulties which result from Retirement.

In order to minimize possible financial devastation, individuals have been paying into “pools” or “reserve funds” of money while things are going well in order to minimize a loss in the event an unforseen tragedy occurs.

 A payment would be made from this fund in the event of a loss, thus “transferring” the potential financial hardship from the individual to the entire group.

This concept of protecting against, and transferring loss or risk, is recorded back to ancient times. As primitive as it was, it is the foundation for our insurance industry today which is based on modern scientific principles, years of research, statistics, data and constantly evolving marketplace.

In the 13th century, ship owners who wanted to insure their ships and cargo against loss at sea, would procure an early form of insurance from wealthy individuals who would transact business in the coffeehouses of England, the most famous of which became the Lloyd’s of London in the 17th century.

Insurance against a loss by fire was first offered in the 16th century. In 1752 Benjamin Franklin started the first fire insurance company in the United States, The Philadelphia Contributorship for the Insurance of Houses from Loss by Fire.

In 1759, the first life insurance company in the United States was established, and is known today as the Presbyterian Ministers fund, the oldest life insurance company in continued existence in the world.

In 1842, Mutual Life Insurance Company of new York was formed, marking the beginning of mutual life insurance as it is known today. Through its charter it declared that policyowners would be entitled to share in the company’s management through the election of directors, and that all surplus would be divided among policyholders.

The insurance industry continued to evolve from the 19th, and onto the 20th century with the development of the first mortality table, computations of premiums and reserves, various policy types, pension plans, group insurance, and the passage of laws to regulate this rapidly growing field and the closely related field of taxation.