Insurance is an important need in modern business world. Insurance is promissory note. Insurance is a promise of reimbursement by an insurer when there is any loss by hazards to their clients, those who are paid previously for concerned hazard. The clients can be an individual or a firm or a group of either. In case of life insurance, it is the promise of reimbursement at the occasion of death or as per agreed period.
The concept of insurance is known since ancient times. The origin and development of insurance can be described as follows.
- Nearly 4500 years ago, the concept of insurance is emerged in ancient Babylonia. Traders used to give loans to bear the risk of the caravan. These loans were to be repaid when goods arrived safely. The medieval trade associations formed a common pool of funds to protect against the risk of losing goods in transit and natural calamities. These funds are used to support in the event of the death of members and captive by pirates.
- In 1347, the European maritime nations first entered into an insurance contract for marine insurance.
- Risk bearers used to meet to transact in Lloyd’s Coffee House in London during 1688. The Lloyd’s became quite popular and by the end of eighteenth century Lloyd’s was one of the earliest modern insurance companies.
- By the end of eighteenth century, marine insurance companies came into existence and these are authorized to write marine, life and fire insurances.
- In the year 1966, London faced a great fire caused by a huge loss of property and life. Dr. Nicholas Barbon started first fire insurance company “The fire office” in 1967 to provide insurance facility.
- Philadelphia Contributionship was the insurance of houses that were lost in fire. It became the first mutual fire insurance company in the United States in 1752.
- Old Equitable was established in England in 1756. It was the oldest life insurance company in existence as a Society for the Equitable Assurance of Lives and Survivorship.
- Edmund Haley is an astronomer, constructed the first mortality table in 1693, which provides link between average life span based on statistical mortality laws and life insurance premium.
- Table for insurance premium rate to age link was given by Joseph Dodson in the year 1756.
- The New York fire in the year 1835 and the Chicago fire 1871 are created the awareness and the need for insurance.
The industrialization and the requirements of the public led to coming of concept of new insurance products. These are like health insurance, car insurance, property insurance, business insurance, etc. These protect the insured against risk of hazard, and to get quickly back into the previous position. For some customers the insurance companies are providing customized insurance packages especially in huge investments by the corporates.
