A Brief History of Insurance

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Your renewal notice comes in the mail. You grumble at the cost, then write out a check. The price is not that much, you reason, for peace of mind.

Sound familiar? In our society, almost everyone has insurance of some type. But how did all this coverage come about?

The origins are a bit murky. Some like to give credit to the Chinese. Others say the first people to consider insurance may have been the caravan traders of ancient Babylon, who devised a way to protect themselves financially from the many perils involved in their trade by shifting the risks to their suppliers.

Either way, the idea was a boon to business, and many soon saw the wisdom of safeguarding goods. By the late 1600s, the concept had spread across Europe. In England, merchants and shipowners who frequented a coffeehouse named Lloyd’s sensed a commercial moneymaking opportunity, and eventually formed Britain’s first official insurance company.

Across the Atlantic, the first insurance company in the new world opened in South Carolina in 1735—and went out of business several years later. Two decades passed before Ben Franklin started a fire insurance cooperative in Philadelphia, which became the basis for America’s first successful company.

In the 1800s, as insurance companies spread across state lines, state governments began promulgating uniform rules and regulations. Surprisingly, now, as then, there is no federal oversight or regulation.

The industry continued to evolve during the 1900s. The turn of the century saw the creation of worker’s compensation, and World War II brought life insurance for soldiers.

Insurance has come a long way since the early times. Today there are policies to cover every need and catastrophe—some real and some only perceived. Yet the basic principle is still the same: protection from loss. That feeling of security, whether for your caravan or your automobile, is what you’re purchasing with your premium dollars.

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