Insurance TermsInsurance TipsOur Disclaimer It’s the 21st century and insurance has a well-established place in Australian society. Insurance serves to provide us with the money we need in the event of an accident which we are unable to remedy from our own pocket in exchange for monthly payments to an insurer. Just think where we would be without the peace of mind that it’s possible to claim back your possessions in the event that they are stolen or damaged. How could we live without the knowledge that in the event of an accident where we sustain serious injuries, we won’t be left out of pocket? With clusters of businesses trying to cash in on this lucrative market, we don’t often think back to where and how this tradition started. Here is a short guide to the history of this peace of mind that many Australians would be lost without.
The commencement of insurance is difficult to allocate to a single date in history, because in truth, we can’t tell when the system first began to take off. It is our assumption that insurance is almost as old as humanity itself.
During the times of a natural economy, an ancient regime where money and markets had no place existed. Instead of commodities like money, ordinary resources were traded and insurance may have existed in a simplistic form. For example, if in a village an individual’s livestock were stolen by outsiders, the rest of the community may each give the individual one of their own animals, knowing that if they did not do this that nobody would help them out if their livestock were stolen at a later date.
The origins of insurance as we know it today can be traced back to the Babylonians as long ago as the 2nd and 3rd millennia BC. Sailing merchants could receive a loan to fund a shipment, and would promise to pay back the lender a greater sum than was borrowed, if the lender gave the guarantee that the loan would be written off if the shipment was stolen or the boat that carried it was wrecked.
However, it is Iran that we have to thank for developing a better organised system that correlates to modern-day insurance. Achaemenian rulers of ancient Persia were the first to insure the people in their province. Leading officials in various ethnic groups would present the monarchy with elaborate gifts in exchange for the promise of governmental protection or assistance should it be required.
The Greeks and Romans were the first to develop concepts of life insurance at approximately 600 BC. This period saw the formation of a series of small guilds called ‘benevolent societies’ which, upon the death of a member, gave compensation and support to their family and took care of their funeral expenses.
In post-Renaissance Europe, insurance took off and gradually began to grow in popularity, leading to the introduction of more specialised insurance. Separate insurance contracts were also available by this time, which meant it was possible to buy insurance which wasn’t bundled into a loan or other transaction.
In 1666, the Great Fire of London raged through England’s capital and completely destroyed over 13,000 houses. It prompted Nicholas Barbon to begin a building insurance scheme and he later established ‘The Fire Office’, a fire insurance company.
Thus, throughout history, insurance has established its position in virtually all aspects of our lifestyles. The insurance system that we take for granted in the modern civilisation of today has been a system that has matured and adapted over hundreds and potentially thousands of years.