Sometimes it seems that insurance cannot be more than a hundred years old … after all, before 1900 there were few people that owned cars, most built their houses by hand and did not take out an enormous bank loan for it, and there was almost no overseas travel (after all, many people had to walk for a full day just to get to the nearest town!). In fact, insurance in general (and even travel insurance) has been around for literally thousands of years. We travel from ancient Mesopotamia to the 21st century, exploring how insurance has changed.
What is Insurance?
The concept of insurance is that many people pay a relatively small amount to a central institution, for protection from financial loss in the event that an undesired event occurs. With regard to travel insurance, travelers pay a small premium before their trip, and can get protection from the loss that would be incurred if they became sick overseas, were the victim of crime, or inadvertently caused damage to someone else’s property, as well as a range of other circumstances.
The First Insurance Policies
These were inked 3000 years before the common era (BCE), as far as we know, and involved Mesopotamian merchants paying caravan operators a ‘risk surcharge’ to protect their goods in the event of them being damaged or taken. In a way, this was travel insurance for your luggage! In 1750 BCE the Code of Hammurabi created the first maritime insurance, with the terms ‘bottomry’ and ‘respondentia’ meaning ‘protection against loss of hull’ and ‘protection against loss of cargo’, respectively.
Early modern insurance
In 1574, Queen Elizabeth I granted the right to establish an insurance office in the Royal Exchange Building to a man named Richard Candler. A quarter century later, in 1601, the first recognised legislation relating to insurance was formalised, the Assurances Act. The Act stated “By means of which Policies of Assurance it cometh to pass upon the Loss or perishing of any Ship, there followeth not the undoing of any Man, but the Loss lighteth rather easily upon many than heavily upon few, and rather upon them that adventure not than those that do adventure.”
In 1666 the Great Fire of London occurred, and the idea of fire insurance sprang up not long after. By the 1690s, the British insurance companies had realised it would be smart to protect their investment against another such fire … and formed the first professional fire brigades!
The Industrial Revolution
During the industrial revolution, Benjamin Franklin started the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. This insurance agency refused to insure houses when the risk of being decoyed by fire was too great – all wooden houses were rejected.
Modern Insurance Policies – The Effect of the Internet
Today, you can insure just about anything you like. While common insurance policies include your house, car, life, travel, income and possessions, some people have also been known to insure things like their crossed eyes (Ben Turpin) and their sense of humor (Rich Hall).
Insurance nowadays, from home to travel insurance, depends on you telling your insurance company of any individual circumstances relating to your risk of having a certain adverse event happening to you, the company using statistical data to assess the risk, and setting a premium (monthly or yearly payment) for you to pay in order to be insured against certain things happening.