Insurance: From Ancient History to Modern Times

Insurance may seem like a modern invention, but the history of insurance policy is thousands of years old. Historians can trace its beginnings to ancient Asia, when Chinese merchants would limit their exposure to dangerous situations, such as river rapids, by distributing goods across many boats, limiting their overall risk.

A more modern version of insurance appeared around 800 B.C. when the Greeks invented the concept of the “general average.” Much like our insurance system today, the general average idea allowed merchants to pay a standard fee to insure their wares during travel. The pool, collected from fellow merchants, would reimburse any trader whose items were broken during travel.

The Modern Era

The history of the insurance policy as we know it today took root in the 18th century, though less than one hundred years earlier, Europeans were using a variation of property insurance. The Great Fire of London revolutionized the industry, as well. Londoners no longer saw insurance as a nice-to-have. It became a must-have virtually overnight.

From there the foundation for underwriting took hold and specializations began to appear. Globally shipping demanded the creation of marine insurance. Insurers soon introduced life insurance, along with the concept of charging people based on mortality rate. Not long after, the concept of accident insurance was introduced. The rest, they say, was history.

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