Welcome to the history of insurance. Some 2000 years before the birth of Christ, merchants in the Babylonian Empire were repeatedly falling victim to robbers on their long travels through inhospitable regions. This prompted them to join the caravans together into larger groups so that they could defend themselves more effectively. Before long, they went a step further. When one merchant suffered a loss on a joint trip, the loss would be shared among the others. The risk community laid the foundation of what we now call insurance. The seafaring nations were confronted with the full force of nature's power as sea trade became more important. A form of insurance arose. A rich citizen bought a stake in the ship and its cargo and received a share of the profit in return if the voyage was successful. In the event of a shipwreck, however, the vessel would lose all his money. An early form of old-age insurance or pensions arose in Europe in the 13th century. Citizens would hand over sums of money or property to an abbey or

nobleman in return for which they would be paid a lifelong annuity. By the end of the 17th century, London's mariners and merchants were meeting in coffee houses of the city to talk business and strike deals. Around this time, the coffeehouse opened by Edward Lloyd in 1688 became a meeting place for transacting shipping insurance. Lloyd's of London is now one of the world's leading insurance firms. People have been concerned with losing their belongings to fire since time immemorial. When the 1666 Great Fire of London destroyed four-fifths of the city centre, demand for fire insurance surged. Insurers were plagued by technical and mathematical deficiencies right up to the 18th century. Premiums were often miscalculated and thus set too high or too low. Many of the mathematically challenged companies either had to give up the insurance business or go bankrupt. In 1763, modern premium calculation methods were used for the first time. Use was made of mortality tables and probability analysis to work out fair and realistic

premiums heralding a new age for the industry. The Industrial Revolution of the 18th century had a major impact on the importance of insurance. People flocked to the cities from the countryside to find work in this new and unfamiliar environment. They were no longer able to rely on the traditional risk communities. The need for professional protection grew, and this translated into rising demand for insurance services. The expensive machinery and large warehouses that came with industrialization also made business owners more concerned about losses. In the early days, however, only buildings could be insured, so uninsured losses were commonplace. New forms of insurance to cover factories and other corporate assets were eventually developed. The modern insurance operation is an extremely complex organization that covers risks from Heidi Klum's legs to satellites. We do live in a changing world. The climate is changing, great demographic forces are at work in our societies, and business is becoming more complex. The history of insurance is interesting, and the future of insurance will be just as fascinating. Thank you for taking the time to watch our video.

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History of Insurance

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