History of insurance - what do you know?
People have looked for ways to share risk for as long as they have traded. The history of insurance is, in large part, the history of commerce.
Ancient beginnings
Merchants in ancient China and Babylon spread their goods across several boats or caravans, so that a single loss would not ruin any one trader. The Code of Hammurabi, from around 1750 BC, included provisions under which a merchant who took a loan to fund a shipment did not have to repay it if the goods were lost or stolen.
In the ancient Mediterranean, the Rhodian sea law introduced the principle of "general average": if cargo was thrown overboard to save a ship, all the merchants with goods on board shared the loss.
Medieval and early modern Europe
Separate insurance contracts appeared in the Italian trading cities in the 14th century. Genoa is often cited as the home of some of the earliest surviving marine insurance contracts. Marine insurance spread with trade through the Low Countries and England.
The Great Fire of London in 1666 destroyed more than 13,000 houses. In its aftermath, Nicholas Barbon set up one of the first fire insurance offices in the 1680s.
At about the same time, Edward Lloyd's coffee house in London became a meeting place for ship owners, merchants and the people willing to underwrite their voyages. This was the origin of the Lloyd's of London market.
Mathematics and life insurance
Work on probability by Blaise Pascal and Pierre de Fermat in the 1650s, and later mortality tables, laid the foundations of actuarial science. The Amicable Society for a Perpetual Assurance Office, founded in London in 1706, is often described as the first life insurance company.
Industrial age and reinsurance
The 19th century brought accident insurance, including cover for railway passengers, and the first state social insurance schemes, introduced in Germany under Otto von Bismarck in the 1880s.
Professional reinsurance also began in this period. Cologne Re was founded in 1846, and Swiss Re followed in 1863.
Today
Insurance became a heavily regulated, institutional industry during the 20th century. Today it is changing again as data, automation and new risks such as cyber reshape how cover is designed and sold.