Introduction and History of Insurance

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

• 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

Introduction and History of Insurance

Where did insurance come from?

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

• WeatherWeather

What types of perils would the caravan What types of perils would the caravan have faced?have faced?

• TheftTheft • BreakdownsBreakdowns

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

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

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

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

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”

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