The Ori­gins of In­sur­ance

The Star (St. Lucia) - - INSURANCE - By D. Tun­stall, re­tired (for­mer FCII, FCILA, FUEDI-ELAE)

In­sur­ance, in essence, is the pay­ment of money in re­turn for another party as­sum­ing all or part of the risk of a loss.

In­sur­ance in­volves risk as­sess­ment and risk man­age­ment. Ba­sic prin­ci­ples of these were prac­ticed by the Chi­nese and Baby­lo­ni­ans thou­sands of years ago when it was nec­es­sary to trans­port goods in boats. Con­veyance of wares across seas and along rivers has en­dured through­out the cen­turies. Over time meth­ods for as­sess­ing risk and the rate to be charged for its as­sump­tion be­came more so­phis­ti­cated, and mar­itime in­sur­ance came to the fore. The first recorded con­tract of in­sur­ance was in 1347, in Genoa, Italy for a marine ven­ture.

Marine in­sur­ance was the main mar­ket for sev­eral hun­dred years. Prop­erty in­sur­ance be­came pop­u­lar fol­low­ing the Great Fire of Lon­don in 1666 when over 13,000 homes were de­stroyed. Fire re­mained the great­est risk but, in those days, there was no gov­ern­ment-run fire­fight­ing ser­vice so the In­sur­ers es­tab­lished their own teams of fire­fight­ers who would re­spond on foot and some­times with a horse-drawn ap­pli­ance. The fire-fight­ers would only at­tempt to ex­tin­guish a fire at a prop­erty that they knew to be in­sured by the com­pany/so­ci­ety that had en­listed them. In­sured build­ings were iden­ti­fied by a small me­tal plaque at­tached to the out­side wall bear­ing the logo of the par­tic­u­lar com­pany from whom in­sur­ance had been pur­chased. These ‘fire marks’ be­came col­lec­tors’ items cen­turies later; there is an im­pres­sive dis­play of fire marks housed at the premises of the Char­tered In­sur­ance In­sti­tute in Lon­don.

In the 17th cen­tury Lon­don was an im­por­tant cen­tre of trade. In 1688 Ed­ward Lloyd opened a cof­fee house in the city as a meet­ing place for busi­ness­men in the ship­ping in­dus­try wish­ing to in­sure car­goes and ves­sels, and in­di­vid­u­als will­ing to un­der­write such ven­tures in re­turn for pay­ment of an agreed pre­mium. This was the ori­gin of the fa­mous Lloyd’s of Lon­don. Lloyd’s is dif­fer­ent to the gen­eral mar­ket in that it is not an in­sur­ance com­pany but a group of ‘mem­bers’ who form syn­di­cates to trans­act in­sur­ance.

The Greeks and Ro­mans es­tab­lished ‘benev­o­lent so­ci­eties’ which, upon the death of a mem­ber, cared for the sur­viv­ing fam­i­lies and paid fu­neral ex­penses. The con­cept was fol­lowed by ‘guilds’ in the Mid­dle Ages and ‘friendly so­ci­eties’ of the Vic­to­rian era. The first life as­sur­ance poli­cies, which paid an agreed amount to a stated ben­e­fi­ciary on the death of named per­son, ap­peared in the early 1800s.

“Ac­ci­dent in­sur­ance” evolved in the mid­dle of the 19th cen­tury as the rail­way sys­tem de­vel­oped. There were a sig­nif­i­cant num­ber of in­juries and fa­tal­i­ties in in­ci­dents in­volv­ing the new lo­co­mo­tives and the in­sur­ance pro­vided pay­ment for death or dis­abil­ity.

As the world has pro­gressed, with ad­vances in science and tech­nol­ogy, types of in­sur­ance have ex­panded to meet the chang­ing needs of so­ci­ety: mo­tor, avi­a­tion, li­a­bil­ity, credit, in­come pro­tec­tion; in­sur­ance for in­di­vid­u­als and for ma­jor cor­po­ra­tions and mar­kets. From the fa­mil­iar, like travel and pet in­sur­ance, to the one-offs such as in­sur­ing a mu­si­cian’s hands, in­sur­ance can be ar­ranged once the pre­mium has been as­sessed to re­flect the de­gree of risk car­ried.

One al­ways hopes that a claim against the in­sur­ance pol­icy will not arise. While some may con­sider the pay­ment of their pre­mium to have been wasted if they are for­tu­nate not to suf­fer a loss, they over­look that it brings peace of mind; that in re­turn for pay­ing a known and rel­a­tively small sum, they are cov­ered in the event of a se­ri­ous loss which oth­er­wise could be fi­nan­cially crip­pling.

The au­thor’s UK pro­fes­sion was in­sur­ance, spe­cial­iz­ing in claims. She was a Fel­low of the Char­tered In­sur­ance In­sti­tute, a Fel­low of the Char­tered In­sti­tute of Loss Ad­justers and a Euro­pean Loss Ad­just­ing Ex­pert. She served as a Pres­i­dent of the Char­tered In­sur­ance In­sti­tute of Croy­don and as a CII tu­tor for stu­dents in­clud­ing those in the Caribbean on cor­re­spon­dence cour­ses.

A fire mark of the Hand in Hand Fire & Life In­sur­ance


Newspapers in English

Newspapers from Saint Lucia

© PressReader. All rights reserved.