Insurance Through the Years: How Has it Developed?
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Insurance Through the Years: How Has it Developed?

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Insurance is a valuable part of our lives, allowing us to feel financially secure without the risk of full liability for our different purchases. Items that can be insured include cars, homes and even our own physical wellbeing. Although people may have conflicting views about having insurance, there will always be an occasion where it’s beneficial to a person securing a preventative premium.

The idea of protecting our assets isn’t a modern invention but a testament to humanity’s understanding of the long-term risk of ownership and trading. It has deep roots across many nations, showing a complex view of how civilization, economies, and asset management work together in several ways.

Protecting assets by sea

Insurance is as old as civilised societies, at least on a level where merchants and trading were concerned. These were known as a bottomry contract to Babylonian merchants dating back to 4000-3000 BCE. It was also recently discovered that Hindus practised this form of borrowing loans in ancient Greece. In simple terms, a bottomry contract allowed merchants to receive a loan in the event of lost shipment at sea. Because of this, traders did not have to repay a loan as the interest covers travel insurance risk. Later on, Roman law recognized a bottomry contract through an agreement where funds were held through a money changer.

Developing different forms of insurance premiums

Sometimes, the development of insurance policies requires a catalyst for people to understand their need. Like how sea merchants saw the risk and dangers of transporting assets by sea, England discovered the danger of property and liability insurance.

The Great Fire of London was a significant catastrophe for many establishments within the medieval city of London back in 1666. Over a decade later, many insurance companies used it as a catalyst to operate and sell fire insurance by 1711. Although many of them were fraudulent operations, some legitimate services like Royal Exchange Assurance Corporation and London Assurance Corporation gave way to property and liability insurance.

Due to sea trades and the international insurance market’s opening, the development of marine insurance came from insurance underwriters, merchants, and bankers to note marine risks when transferring assets by sea. Edward Lloyd became famous in 1769 as the founder of a formal group of underwriters, becoming a dominant insurer of marine activities and other property risks.

Taking into account financials and assets in America

The development of the Presbyterian Ministers’ Fund founded life insurance as a basis for their trade within the American colonies in 1759. By 1920, there were around 17 stock life insurance companies in New York. Although the insurance trade was gaining a lot of traction, many property insurance companies failed due to poor management and inadequate distributing systems. Some were also unequipped to handle unexpected crises like the Great Chicago Fire in 1871 and the San Francisco Earthquake in 1906.

Besides natural calamities, the insurance trade was at risk of falling on itself since there were many problems in the life insurance business. Many bad practices followed after the U Civil War since there was no regulation of effective rates and outrageous claims. Thankfully, the 19th century led to steady growth and reliability in the insurance trade. Over 4,000 property-liability insurance companies remained strong by 1989 and around 2,300 life insurance companies in service.


The development of insurance underwent a difficult learning curve for many civilizations. Although the growth of these pockets in society was in different corners of the world, the need for protecting assets seemed to be a universal understanding for all business-minded individuals worldwide. People undergo many interactions and transactions every day, from purchasing homes to paying for health care. In response, these insurance companies devoted their services to consider risk and reinforce protection in these varied life-changing decisions.

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Written by Daniele Paoletti