History of Insurance

2. Introduction and History of Insurance

3. Introduction and History of Insurance
What is Insurance?What is Insurance?
Provides protection against Provides protection against
financial lossesfinancial losses
byby
Pooling the resources of Pooling the resources of
policyholderspolicyholders

4. •Insurance is created when people Insurance is created when people
like you and your neighbors pool like you and your neighbors pool
their resources to protect their resources to protect
themselves from lossthemselves from loss
•If the risk of loss can be spread If the risk of loss can be spread
over a large enough group, the over a large enough group, the
effects of the loss to any one effects of the loss to any one
individual can be minimizedindividual can be minimized
Introduction and History of Insurance

5. Introduction and History of Insurance
Where did insurance come from?

6. Introduction and History of Insurance
““The Code of Hammurabi”The Code of Hammurabi”
Created by the Babylonians around 2100 Created by the Babylonians around 2100
B.C. to guarantee safe arrival of their goods B.C. to guarantee safe arrival of their goods
by caravanby caravan

7. •WeatherWeather
What types of perils would the caravan What types of perils would the caravan
have faced?have faced?
•TheftTheft •BreakdownsBreakdowns

8. Introduction and History of Insurance
As history progressed, the need for As history progressed, the need for
insurance increasedinsurance increased
The Phoenicians and Greeks used The Phoenicians and Greeks used
insurance for their seaborne insurance for their seaborne
commercecommerce
The Romans were the first to use burial The Romans were the first to use burial
insuranceinsurance

9. Introduction and History of Insurance
The first Insurance Company was The first Insurance Company was
formed in 1688 in Londonformed in 1688 in London
(Lloyds of London)(Lloyds of London)
Merchants, Ship-owners, and Merchants, Ship-owners, and
Underwriters met at a coffeehouse Underwriters met at a coffeehouse
to discuss how to protect the sea to discuss how to protect the sea
voyagesvoyages

10. Introduction and History of Insurance
Modern insurance traced back to the Modern insurance traced back to the
“Great Fire of London” in 1666“Great Fire of London” in 1666
13,200 houses were destroyed13,200 houses were destroyed
Societies were formed to pool money for Societies were formed to pool money for
losseslosses
Also created the need for modernizing fire Also created the need for modernizing fire
fightingfighting

11. Introduction and History of Insurance
The first American Insurance The first American Insurance
Company was formed in Company was formed in
Charleston, South Carolina in 1735Charleston, South Carolina in 1735
Fire Insurance Companies began Fire Insurance Companies began
spreading to New York City and spreading to New York City and
PhiladelphiaPhiladelphia

12. Introduction and History of Insurance
Benjamin FranklinBenjamin Franklin
•Founded America’s first successful insurance Founded America’s first successful insurance
companycompany
•Founded the first mutual insurance companyFounded the first mutual insurance company
•Encouraged prevention by educating the public Encouraged prevention by educating the public
about fire hazardsabout fire hazards
•Refused to insure wooden buildingsRefused to insure wooden buildings
•““An ounce of prevention is worth a pound of An ounce of prevention is worth a pound of
cure”cure”

13. Introduction and History of Insurance
Insurance is Big BusinessInsurance is Big Business
United States Insurance IndustryUnited States Insurance Industry
•Trillion dollar businessTrillion dollar business
•Employs over 2.5 million people in USEmploys over 2.5 million people in US
•As the population ages and wealth grows the As the population ages and wealth grows the
industry will continue to expandindustry will continue to expand