The history of insurance dates back to ancient times. There has always been a need for insurance. The basic concept of insurance is to spread the risk among a large enough pool so that no one person suffers the entire cost of the loss. Ancient insurance concepts date back to the days of early hunters. Hunters went on hunting expeditions in groups to minimize the risk of a person's injury by a wild animal.
The First Insurance Policy
The first insurance policy came from ancient Babylonia. King Hammurabi established the "Hammurabi Code." This code established the practice of forgiving a debtor his loans in the event of a personal catastrophe such as death, disability or loss of property.
In the Middle Ages artisans belonged to guilds. Everyone paid dues to a coffer, which served as an insurance fund. If the artisan's establishment was destroyed or if he were killed, funds were used from the coffer to pay for rebuilding or supporting the widow and children.
Lloyd's of London
The origin of Lloyd's of London was in the late 1600's in the coffeehouses of London. Ship owners traveling to the Americas sought insurance for their cargo and journey. Wealthy merchants funded the trips in exchange for returns from the goods the colonists discovered or manufactured in the new world.
The origin of fire insurance came after the great fire of London in 1666. Survivors found themselves homeless. Groups of merchants who had previously financed the ship's journeys into America began offering fire insurance.
Insurance in America
Insurance was slow to develop in America. The colonist's lives were fraught with dangers. Three-fourths of the colonists died during the first 40 years after coming to America. It took over 100 years for insurance to be established in America.