Even though you rely on insurance protection in your everyday life, chances are you’ve never given its long history a second thought. The fact is, insurance has been around for some 5,000 years and has taken quite a fascinating journey over those many centuries. Let’s take a peek at how insurance has evolved from its beginning days in ancient China to the versatile, convenient and comprehensive products of today.
Introduction to Insurance: 3000 BC
Long before the concept of a motor vehicle was ever even dreamed of, insurance – or the act of shifting the burden of risk in exchange for money – was becoming increasingly popular. It began with Chinese merchants who, growing weary of losing valuable goods due to shipwrecks, decided to do something about it. A group of merchants got together and divided up their goods to be evenly distributed onto several ships. That way if one ship went down, only a portion of each merchant’s cargo would be lost. This was, essentially, the birth of modern-day insurance protection.
A few hundred years later, in the late 1700s BC, Babylonian King Hammurabi developed a brand new type of insurance to help merchants protect their valuable goods. This new concept, known as “bottomry,” allowed merchants to obtain loans from lenders to finance their shipments. The loans, along with interest, were to be paid back upon the safe arrival of the goods. If the shipment was lost in transit, no monies were due. In other words, merchants were able to protect themselves financially by investing a premium.
Insurance Protection AD
As years progressed, more improved forms of insurance began to take shape. In Genoa, Italy, the first officially signed insurance contract was inked with quill pen in the year 1343. These policies were similar to those of the ancient Babylonians, only because they were signed in ink, they were more ironclad and reliable.
In the 1600s, more thought was given to the logistics behind insurance protection, such as how age is a factor in the cost of life insurance. These enhancements were based on the newly developed laws of probability and other mathematical advancements. Subsequently, fire insurance and health insurance were also developed and introduced during this time.
The Birth of Car Insurance
As history has documented, the first vehicles to hit the road were anything but safe. To address the potential dangers these machines presented, auto insurance was officially developed in the late 1800s. By the mid-1920s, this concept was expanded to include what’s known as liability insurance, or assigning fault when handling claims. Over the next century, many advances were made that have ultimately shaped the insurance products we are familiar with today.
Insurance Products in the 21st Century
We’ve certainly come a long way since those early days of insurance. Imagine what the founders would think if they could experience the many modern conveniences we take for granted, such as online quotes, electronic premium payments and instant, dedicated claims service. Now imagine what the next chapter might look like. If history has taught us anything, it’s that the best is yet to come.
Do you have the right partner beside you for this journey? Contact us today.