After reading this article you will learn about the evolution of insurance industry.
The insurance industry as we see it today is modern and advance stage which has been attained in a phased manner over a long period. Insurance is basically a financial service as such it grew up like a financial sector on the analogy of banking. Like banking the roots of insurance can be traced back to ancient period.
Most probably Babylonia round about 2100 B.C. saw the advent of insurance by traders who wish to ensure that their consignments reach the destination safely. The traders themselves used to bear the risk for giving loan or advance money to caravans for carrying the goods at the point of delivery. Once the goods were delivered safely the amount of loan was repaid with interest.
The king of Babylonia also provided protection to such type of insurance under the code of Hammurabi which dealt with all the aspects of administration including general administration, trade, finance, economy, insurance and others. Romans were also contemporary in the field of insurance but the initial stage was confined to a social cause of to perform the burial of dead bodies.
In order to pay due regard to a dead person certain rituals were performed which required money. An individual being unable to bear the cost of burial they formed clubs where members paid certain amount and in case of need all expensive were met by the club. In other words it was a type of insurance as the contribution to the club may be considered as premium.
Marine services had always been a matter of concern for the sea piracy as per practice among the traders the risk was beard upon by themselves. The first recorded evidence of marine insurance is traced back to 1347 in Genoa. At the different intervals of times the insurance services had been taking different shapes. First started by individual traders, a club of traders/individuals, societies as cooperatives to look after their respective members.
The test of the time introduced more viable methods when in 1688 the proper insurance system started taking place at Lloyd’s House in London where merchants, ship owners and underwriters used to meet to discuss and transact business. So far as America is concerned the first modern insurance company came into existence in the year of 1735.
In Britain in the early 19th century the industries were facing a lot of problems because of accidental damage to the industry workers. As such the British government passed a workmen compensation Act in 1897 ensuring the employees against industrial accidents. Likewise with increase of motor vehicles accidental cases increased and it was felt to be a public liability and vehicles’ insurance started.