We all know about life insurance – a simple concept that has gone on to become a multi-trillion dollar industry worldwide.

But, very few of us know about life insurance, the way it started and it’s history; this blog post hopes to be a small primer about the chronological history of life insurance.

2000 BC – Trader Insurance (China & Babylon)

By 2000 BC, traders started realizing that they needed to insure their goods to ensure that they could protect themselves from losses due to pirates, looting and vagaries of nature.

This was actually the advent of “insurance” as a concept and the first occurrence of human beings insuring items to hedge risk.

A part of merchant hedging involved spreading the risk by distributing the goods across various vessels and ships to ensure that the loss was minimal.

600 BC – Origins of Health & Life Insurance (Greeks & Romans)

The Greeks and Romans by the 6th century BC created the basic life insurance program. They created specific guilds that were called the “benevolent societies” whose primary focus was to care for the family of deceased victims and handle funeral expenses.

500 BC – People Insurance (Ancient Persia)

The Achaemenian dynasty which produced some of the greatest Persian emperors including Cyrus and Darius was the first to create a concept of “people insurance”. During the start of the New Year, people would go to registered offices and present gifts to the king, which were duly notarized.

Whenever the person who presented the gift was in trouble, the kingdom would step in to help them out.

500 AD – General Average (Rhodes Island)

The merchants of Rhodes created an insurance method they termed “general average”; using general average, all the merchants who were part of the guild would pay an average premium on insurance and the money was used to reimburse any merchant who faced losses and was part of the guild.

1300 AD – Pledged Insurance (Genoa)

By the 14th century, insurance was backed by pledged by immovable assets including estates and property. With this new method, insurance was completely separated from investment, which proved especially useful for maritime insurance.

1600 AD – Modern Insurance (London)

By the end of the 17th century, marine and maritime insurance became a common concept in London due to its increasing importance as a trading hub.

Life insurance was still rare, but there were multiple instances in which people insured their life.

By the end of the 17th century, the devastating “Great Fire Of London” which devoured innumerable number of homes catalyzed the need for insurance; thus, the first insurance company in the United Kingdom was born in the year 1681.

1851 – Current Insurance Regulatory Framework (New Hampshire)

The modern day insurance framework has it’s roots in the year 1851 when New Hampshire appointed the first insurance commissioner.

1945 – McCarran – Ferguson Act

By 1945, The McCarran – Ferguson Act was passed; this act meant that the state would play a major role in the regulation of insurance and insurance companies.

1999 – Financial Modernization Act

The Financial Modernization Act, passed in 1999 finally affirmed the relationship between the insurers and the financial institutions. It created a comprehensive framework and further affirmed that the states should regulate the insurance industry.

This contribution has been made by Todd Bently who works closely with a company that specializes in whole life insurance and universal life insurance.

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