Insurance has been around for almost as long as we have owned property. While it has undergone a number of changes in the way it is formulated and what it covers, insurance remains as vital today as it has at any other time.
At its very heart, insurance is there to protect people and property. When you own something of value, then you want to mitigate any associated risk as a result of loss or damage.
While there are various recorded origins, one of the first dates back to Babylonian times and the Code of Hammurabi. Named after the sixth king, this was a form of contract that all people needed to abide by. Along with the various legal statutes, there were rules regarding liability for damage and also circumstances in which debt would be absolved – for instance if the person was struck down with illness or died.
This kind of informal agreement may not be exactly what we are used to these days, but it could certainly be argued that it paved the way for future development. So even though the Code of Hammurabi was decreed almost 4,000 years ago, there are still echoes of it today.
During the last millennium, things evolved rapidly. Rather than being reliant on the rules of leaders, individuals grouped together to provide protection and support. This relies on the charity principles employed by many religions, with a wider group supporting individual as and when required. It was perfectly demonstrated by the many guilds that appeared during the Middle Ages.
People would learn a craft, such as joinery, and become part of the guild – often paying a small subsidy. If any member were to fall on hard times, then support could be provided. This would later evolve with the Lloyd’s of London group, who represented a range of businesses including international importers and exporters. The loss of stock, ships or property could be hugely damaging, so again a collective could protect the interests of the individual.
Protecting Personal Property
As far as personal property is concerned, the major turning point came with the Great Fire of London. With the majority of homes destroyed and over 70,000 people left homeless, it was a catastrophe of unimaginable proportions. Worst of all, there was no contingency for all that loss. Wooden homes and churches were reduced to ashes, with most people unable to cover the rebuilding costs. This left the city, the inhabitants and the government in a difficult position.
The answer, of course, came in the form of home insurance. Following the events of 1666, homeowners were finally able to protect their property with a basic policy. By paying an annual fee to a bank or private company, people could off-set their own risk and enjoy a little peace of mind.
From here the industry, the coverage and the legislations grew exponentially. The modern policy had been born, even if it did need a little extra refining. Over the next century it spread across Europe and eventually, America along with the rest of the world. The coming of the industrial revolution and increased wealth among the masses provided a catalyst for growth.
As well as homes and businesses, cover was increasingly being sought for personal items, farm animals and vehicles. This would continue to develop, with contents insurance and other specific forms of cover.
The biggest innovation in the last century was the introduction of car insurance. The Road Traffic Act of 1930 made third party cover a legal requirement. This was to ensure that careless driving did not impact careful motorists. With the roads becoming busier, collisions were increasing. So without insurance, car owners could stand to lose significant sums of money. Of course this same rule is still in place today.
With more of us carrying valuable items on our person, insurance for mobile phones, laptops and tablet computers have really come to prominence in recent years. As with all forms of cover though, the history of this very modern insurance can be traced back hundreds, even thousands of years.