How has the history of insurance evolved from ancient times to the present day?
The history of insurance is as old as humanity. It was created by the need for security and keeps it alive to this day.
Let’s sit in a time machine today, fly back to ancient times, and look at its history. Where it came from and where we are today.
Are you ready? Fasten your belts! 3-2-1…
Ah, idiot time machine! Does anyone have a normal instruction manual? I didn’t think of this ancient time!!! Maybe this other button will be good.
Insurance of the prehistoric times
In the very first period in the history of insurance, so for people who have been hunting and collecting, we have obviously not been able to talk about insurance bonds. However, our ancestors have already realized that it is safer together. The whole family is more likely to get food if they share everything. Once one man succeeds in hunting, another time the other. They share the risk in the same way. If the hunt is just not successful, or a lion is just taking the game that has already been killed, it is not too much of a problem either, because he got either from gathering or from someone else’s prey. Provided he had previously been a contributing member.
To put it very simply, modern insurance looked like this in prehistoric times:
Membership fee = sharing of hunting prey
Insurance event = the kitten took my prey
Compensation = I get it from someone else
It probably hasn’t gone online yet. Do not ask Yield and total costs, there are no written pdfs of this. It is sure that it could have been a very good little construction because it is still alive to this day. If you think about it, you use it yourself: whatever happens to you, you first turn to your immediate environment, whom you also help in case of trouble.
Code of Hammurabi, that protected the little man
Continuing to spin the wheel of time, we reach all the way to ancient Babylon. Here, Hammurabi’s Code was the first to describe laws similar to modern insurance elements today.
These were basically for the safety of the producers. Basically, it would be useful to reach out to them today.
The story at the time was based on the land lease. At the time, the tenant could have given some percentage of the crop to the landlord as rent. But if, say, the drought took the crop, and so the landlord would not had achieved anything, he could not have expected rent either. The unfortunate tenant had just enough trouble with what to eat. It was a kind of risk sharing and risk mitigation. At the same time, it protected the tenants from a possible indebtedness through no fault of their own (contemporary advocacy )
The old man knew something, didn’t he?
Moving to the Middle Ages…
The history of insurance gained new momentum in the Middle Ages. It really spread in the Middle Ages due to the pursuit of security. Trade flourished, no longer just hunting and gathering, possibly farming in a village community. By this time they were already producing specializedly and the different peoples were also trading with each other and thus accumulating wealth. Which they wanted to protect somehow.
People clustered in guilds according to occupations, and they supported each other based on that. The guilds came together, paid a membership fee, and got it back in case of trouble. Buildings built of wood burned easily, and if this happened, they were given help in rebuilding. In the same way, the guildmaster was helped if he was robbed or possibly unable to work. In the event of his death, his family received support.
New World Risk, wanted new insurance coverage
Shipping and the discovery of the New World in the 1600s gave a new impetus to insurance. At the time, it was still connected to trading, the stock market, and venture capital investors. The Italians already had huge merchant fleets at that time, and it is easy to guess that if even one was sunk or kidnapped, it could have been a serious loss to the owner. Unless they work together or there was someone who paid compensation in exchange for a certain fee.
Whoever wanted to share in the American miracle as an investor, a financier of ships, expeditions, wanted to know what risk he was taking. It was then that the calculation of probabilities and the classification of risk levels became even more viable. And Pascal’s triangle was useful for actuarial tables, apparently in a contemporary way. (But similar ones have been used ever since.) With all of this, insurance premiums have become lower, much more realistic, so they have been able to spread more widely.
How has insurance become a “mass product” available to all?
The Pascal triangle was not only used for shipping. Since people were still typically used wood to build (think of the great fire of London in 1666, where a great many were left homeless), there was a need for home insurance as well. It was even less refined at the time, it was very likely that it had not covered the burned in iPhone, and at that time it was mostly only and exclusively protected against fire. The insurance agreement could have been quite simple: there is fire, they pay, there is no fire, you do not get payed. As today, they could only look at the subject of intent / accident, but unlike today, they did not examine its origin. So if the iPhone charger has sparked and become a fire because of it, it was also a fire.
In a fire, the destruction of the house (and the iPhone in it) could be a big blow on its own. It was a bigger disaster if the breadwinner burned in. The almost direct consequence of this was the appearance of the first life insurance. At first, it was typically related to the fire, so a medieval manager who had a heart attack because of a burned-out smart phone could not expect much good. (how lucky they were to take the stage only when they could have taken out insurance )
The more multi-layered the demand, the wider the palette. This was shown by the Industrial Revolution
The Industrial Revolution made the story even more refined. More production, more wealth, more and more risk. It was then that the first insurances in the modern sense appeared.
The predecessors of today’s modern corporate insurance have been established in companies. In addition to the expansion of life insurance and home insurance for individuals, the car has become a way of life, but also the provision of travel.
In the last 100 years, the world economy has revived, and it has become justified to expect more than just members of the community when there was a problem.
As a result, you must see the real picture before you pay for insurance that you really don’t need or that isn’t optimal for you.
The good side of the story is that by properly matching the needs with the tools, you can now even build an employee benefit system on these solutions.
The good news as a company manager is that much of this is can be accounted as a cost and will increase security for employees.
(The personalization of this issue takes place in the framework of a personal meeting, so I will not explain it here now.)
What can you take with you from this history of time machine insurance today?
Ahhhh, the time machine is having fun again! I’m really throwing this crap out! Not good for anything, unwilling to take me to 2222. Yet I read in the manual that キ ー を 押 す.
Well, now that I’ve sent Dino home from a time machine, let’s get back to insurance.
The insurance basically satisfies man’s ancient, increased need for security. Over time, people have realized what are the main points that can cause a normal daily life to slip aside. At first, these points were combined with community power, and then, just as the occupations were grouped into guilds, the first insurance companies appeared.
They assumed risks for a minimal surcharge that would have been unmanageable for the individual on their own.
In today’s world, the same is true. We cover risks through insurers that we would not be able to do on our own or just with great difficulty. This gives us the opportunity to more easily retain the wealth we have already acquired and free up resources for growth.
Contact us with your questions. Feel free to comment 🙂
Dino just doesn’t leave me alone 🙂