History of Insurance
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Insurance originated thousands of years ago when groups would pool resources to protect merchants transporting goods from losses. The first formal insurance company was formed in London in 1688 and focused on protecting sea voyages. Modern insurance developed further after the Great Fire of London in 1666 when societies were formed for people to pool money to cover losses. The first American insurance company was established in Charleston, South Carolina in 1735 and the industry has grown significantly over the centuries to become a trillion dollar business employing millions of people.
History of Insurance
- 2. Introduction and History of Insurance
- 3. Introduction and History of Insurance What is Insurance?What is Insurance? Provides protection againstProvides protection against financial lossesfinancial losses byby Pooling the resources ofPooling the resources of policyholderspolicyholders
- 4. • Insurance is created when peopleInsurance is created when people like you and your neighbors poollike you and your neighbors pool their resources to protecttheir resources to protect themselves from lossthemselves from loss • If the risk of loss can be spreadIf the risk of loss can be spread over a large enough group, theover a large enough group, the effects of the loss to any oneeffects of the loss to any one individual can be minimizedindividual can be minimized Introduction and History of Insurance
- 5. Introduction and History of Insurance Where did insurance come from?
- 6. Introduction and History of Insurance ““The Code of Hammurabi”The Code of Hammurabi” Created by the Babylonians around 2100Created by the Babylonians around 2100 B.C. to guarantee safe arrival of their goodsB.C. to guarantee safe arrival of their goods by caravanby caravan
- 7. • WeatherWeather What types of perils would the caravanWhat types of perils would the caravan have faced?have faced? • TheftTheft • BreakdownsBreakdowns
- 8. Introduction and History of Insurance As history progressed, the need forAs history progressed, the need for insurance increasedinsurance increased The Phoenicians and Greeks usedThe Phoenicians and Greeks used insurance for their seaborneinsurance for their seaborne commercecommerce The Romans were the first to use burialThe Romans were the first to use burial insuranceinsurance
- 9. Introduction and History of Insurance The first Insurance Company wasThe first Insurance Company was formed in 1688 in Londonformed in 1688 in London (Lloyds of London)(Lloyds of London) Merchants, Ship-owners, andMerchants, Ship-owners, and Underwriters met at a coffeehouseUnderwriters met at a coffeehouse to discuss how to protect the seato discuss how to protect the sea voyagesvoyages
- 10. Introduction and History of Insurance Modern insurance traced back to theModern insurance traced back to the “Great Fire of London” in 1666“Great Fire of London” in 1666 13,200 houses were destroyed13,200 houses were destroyed Societies were formed to pool money forSocieties were formed to pool money for losseslosses Also created the need for modernizing fireAlso created the need for modernizing fire fightingfighting
- 11. Introduction and History of Insurance The first American InsuranceThe first American Insurance Company was formed inCompany was formed in Charleston, South Carolina in 1735Charleston, South Carolina in 1735 Fire Insurance Companies beganFire Insurance Companies began spreading to New York City andspreading to New York City and PhiladelphiaPhiladelphia
- 12. Introduction and History of Insurance Benjamin FranklinBenjamin Franklin • Founded America’s first successful insuranceFounded America’s first successful insurance companycompany • Founded the first mutual insurance companyFounded the first mutual insurance company • Encouraged prevention by educating the publicEncouraged prevention by educating the public about fire hazardsabout fire hazards • Refused to insure wooden buildingsRefused to insure wooden buildings • ““An ounce of prevention is worth a pound ofAn ounce of prevention is worth a pound of cure”cure”
- 13. Introduction and History of Insurance Insurance is Big BusinessInsurance is Big Business United States Insurance IndustryUnited States Insurance Industry • Trillion dollar businessTrillion dollar business • Employs over 2.5 million people in USEmploys over 2.5 million people in US • As the population ages and wealth grows theAs the population ages and wealth grows the industry will continue to expandindustry will continue to expand