History of insurance

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3000 to 1000 BC[edit]

Ancient Chinese and Babylonians practiced a form of insurance by redistributing their wares among various ships. That way the loss of a single merchant's boat would not bankrupt the boats owner. The risk was spread among all of the merchants. This shared the risk of loss and represents the first recorded use of insurance in history.

Around 1750 BC the Code of Hammurabi notes a type of insurance made for sailing vessels. When a merchant would take out a loan to buy goods, he could pay an additional fee to the lender that would cancel the debt should the ship be lost at sea. This was the first time that modern insurance--where someone assumed risk in exchange for money--occurred.

1000 to 0 BC[edit]

The Greeks and Romans had an early form of life insurance in the form of benevolent societies. Members would pay for the burial expenses of other members and give money to their families when a member had died.

There are records of a special type of loan for ships used in Athens where the loan would be canceled if the ship were lost. These loans had different interest rates that reflected the risk of traveling at different times of the year.

0 to 1700 AD[edit]

Up to about 1300, insurance was usually tied to a loan of some type. The first known case of a pure insurance policy was in 1343. In 1552 the first legal book on insurance was published.

In 1680 a coffee shop was opened that became a popular place for people looking to buy and sell insurance for the shipping industry. The owner was Edward Llyod and what started as a coffee shop eventually became Llyods of London.

Following the London Fire of 1666, an insurance company to insure homes against fire was opened. Established in 1680, the "Fire Office" was the first fire insurance company in England.