Introduction and History of Insurance

Introduction and History of Insurance

What is Insurance?

Provides protection against

financial losses
by
Pooling the resources of
policyholders
 Introduction and History of Insurance

• Insurance is created when people

like you and your neighbors pool
their resources to protect
themselves from loss

• If the risk of loss can be spread

over a large enough group, the
effects of the loss to any one
individual can be minimized
Introduction and History of Insurance

Where did insurance come from?

 Introduction and History of Insurance

“The Code of Hammurabi”

Created by the Babylonians around 2100

B.C. to guarantee safe arrival of their goods
by caravan
What types of perils would the caravan
have faced?

• Weather • Theft • Breakdowns

 Introduction and History of Insurance

As history progressed, the need for

insurance increased

The Phoenicians and Greeks used

insurance for their seaborne
commerce

The Romans were the first to use burial

insurance
Introduction and History of Insurance

The first Insurance Company was

formed in 1688 in London
(Lloyds of London)

Merchants, Ship-owners, and

Underwriters met at a coffeehouse
to discuss how to protect the sea
voyages
 Introduction and History of Insurance

Modern insurance traced back to the

“Great Fire of London” in 1666

13,200 houses were destroyed

Societies were formed to pool money for

losses

Also created the need for modernizing fire

fighting
Introduction and History of Insurance

The first American Insurance

Company was formed in
Charleston, South Carolina in 1735

Fire Insurance Companies began

spreading to New York City and
Philadelphia
 Introduction and History of Insurance

Benjamin Franklin

• Founded America’s first successful insurance

company

• Founded the first mutual insurance company

• Encouraged prevention by educating the public

about fire hazards

• Refused to insure wooden buildings

• “An ounce of prevention is worth a pound of

cure”
 Introduction and History of Insurance

Insurance is Big Business

United States Insurance Industry

• Trillion dollar business

• Employs over 2.5 million people in US

• As the population ages and wealth grows the

industry will continue to expand