The History of Insurance
August 23, 2021
For as long as people have been gathering together and owning property, there has been a desire to protect that property through communal means. People have banded together over history to pool their resources and replace damaged property if a member lost their property. These were early forms of risk management and risk transfer.
Nowadays, insurance is everywhere in our world – there are very few activities you do that are not insured somehow. Flying in an airplane, driving your car, going to a ballgame or national park, working, even hosting friends in your home are all things people insure.
We even see insurance for valuable personal assets. Coffee and wine tasters might insure their noses and taste buds. Athletes insure their legs and arms. Singers or vocal performers insure their voices.
But how did insurance get started? What is the history of insurance, how did we get to today’s thriving industry, and what is different from the original model?
Read on to learn more about the history of insurance, then contact us at Duliban Insurance Brokers to learn more.
The History of Insurance
Insurance has a long and fascinating history that continues to be an essential part of modern living.
Ancient History
There are records of different types of risk management and insurance in ancient history. Some ancient traders engaged in the risk management strategy of reducing their risk by distributing their goods over several vessels – that way, if one ship encountered a storm and was damaged or sank at sea, the rest of the cargo would still be safe.
Farming communities pooled resources together by sharing seeds, harvests, and storing grain in communal granaries or storage areas. Farmers practiced risk management techniques like duplication – planting separate fields with the same crop so if storms damage one, the other will survive.
These same risk management principles that developed through society over time are used today.
Modern Insurance
As societies continued to develop, the need for insurance also grew. People living in closer proximity to each other in cities realized the need for fire insurance after the Great Fire in London in 1666. Many fire insurance companies were started in the years following the Great Fire, and these fire companies evolved to cover other types of property, life, illness, and health. These companies are the basis of modern property insurance.
Lloyd’s of London
Lloyd’s of London is a famous firm in London that has roots dating back to 1688 at a coffeehouse called Edward Lloyds Coffeehouse in Tower Street. The need for shipping insurance is what truly brought insurance to its beginnings. The marine shipping industry was big business, and Lloyd’s established itself as the place for intelligence information about the industry. Merchants gathered, then began pooling resources to protect each other’s investments – if a ship were lost to piracy or poor weather, the shipowner would recover his loss from the pool.
Lloyd’s remains a powerhouse in the insurance industry today. It continues to house traditions of the insurance world, like the Lutine Bell, which is famously rung once if a ship is lost, twice for good news, or the logbook where a calligrapher has handwritten accounts of lost ships since the early days of Lloyd’s. Visitors may request a tour of the stunning Lloyd’s building in London, and it is surely a treat for those in the insurance industry!
The Future of Insurance
The future of insurance is here now. We see many innovations through the use of technology to improve the insurance experience. This helps both customers and insurance company employees by making things easier and more efficient.
Some examples of insurtech innovations being implemented in carriers today include chatbots to communicate with customers and help employees, blockchain applications to securely transmit information and store immutable records, and telematics to make auto insurance risk more accurate to rate and manage.
Other technology companies from outside the insurance industry are also making waves. For example, the home gadget company Nest manufactures smart appliances to measure and control various settings in the home, like temperature. They are partnering with insurance carriers to incentivize consumers who use Nest products with an insurance discount. The insurance company believes the risk management the smart products provide will offset the discount they give consumers.
Similar partnerships exist in auto insurance. Consumers may elect to install a device in their vehicle through a mobile phone app or external device and share driving data with their insurer. The data gives details on the types of miles driven, times, distances, and safety metrics. This data is valuable to insurance companies as they can use it to understand driving behaviors and rate you more specifically as a safe driver. Because the data is valuable, the insurance company will offer a telematics discount to drivers who collect and share their data.
Final Thoughts
Insurance is an industry with a long and interesting past of helping people and businesses succeed. Without insurance, there would be fewer options and opportunities in the world. It connects people and ideas around the globe, letting innovations in one place help people in another.
The insurance industry is undergoing a renaissance of sorts now as we see technology changing the way insurance is underwritten, sold, and managed. Risk is always evolving, and so is the insurance and risk management industry.
Traditional institutions like Lloyd’s of London continue to hold an essential place in insurance and risk management. Still, newer evolutions in how we manage risk are now possible thanks to technology and innovative uses of technology. This means a safer world for everyone.
How do I Learn More?
Duliban Insurance Brokers continues to be at the forefront of this digital revolution in the insurance industry. We have utilized technology to create a quick, easy, and trustworthy experience for all of our customers, and will continue to innovate as we reach our goal of becoming Canada’s Hometown Broker!
Contact the experts at Duliban Insurance Brokers for all of your insurance needs. Our licensed experts will be happy to answer any questions you have.
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