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Where did the Idea of Insurance Come From?
In the 21st Century we are used to the idea that there is an inherent risk to almost everything that we do in life, and that should something go wrong it’s likely to cost us time and money to recover.
Consequently, we are also all familiar with the idea of insurance to protect ourselves, our property and our businesses. Nowadays there is very little that cannot be covered with some form of insurance policy, whether it is van insurance, home insurance, car insurance or shop insurance.
But when and where did the idea of such protection first appear?
The first stimulus was trade, and transferring goods by sea in ships and in around 1750 BC, the Babylonians developed a system which was recorded in the famous Code of Hammurabi.
The system was used by the early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen or lost at sea.
The first insurance contracts as we would understand them today originated in Genoa in the 14th Century. These were separate contracts specifically covering the risk of loss of goods and not bundles with the earlier idea of a form of indemnity against a loan as well as loss of goods.
The idea of home and property insurance is thought to have arisen as a result of the Great Fire of London in 1666 that destroyed more than 13,000 houses. In 1681, economist Nicholas Barbon and eleven associates established the first fire insurance company, the "Insurance Office for Houses” to insure brick and frame homes.
The famous coffee houses of London were also the birthplace of the first types of business insurance, starting with marine insurance but now covering a wide variety of types of cover for businesses, from shop insurance to public liability, to professional indemnity cover.
In the late 1680s, Edward Lloyd opened a coffee house on Tower Street which became a reliable source of the latest shipping news and eventually a meeting place for those in the shipping industry wishing to insure cargoes and ships and those willing to underwrite such ventures. This was the origin of the underwriters Lloyds of London.
Life insurance arose in the mid 1700s with the establishment of the Amicable Society for a Perpetual Assurance Office, founded in London in 1706 by William Talbot and Sir Thomas Allen. Each member of the society paid a fixed annual payment per share on from one to three shares and at each year-end a portion of the money was paid to the wives and children of members who had died.
Low Cost Car Insurance plainly could only develop along with the motor car, and is said to have first been developed in the USA. In the UK the British Parliament passed the Road Traffic Act in 1930, making cover compulsory because a rising number of law suits following car accidents.
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