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