The History of Insurance

1775 BCE, Mesopotamia

• Hammurabi Bas Relief in the U.S. House of Representatives
  
  Hammurabi, sixth king and first emperor of Babylon dictated the first insurance policies on a stele of 282 civil laws. As translated by L.W. King and edited by Richard Hooker, code number 23 insures against theft: "If the robber is not caught, then shall he who was robbed claim under oath the amount of his loss; then shall the community, and...[missing text] on whose ground and territory and in whose domain it was compensate him for the goods stolen." Law 24 insures kidnapping cases: "If persons are stolen, then shall the community and...[missing text] pay one mina of silver to their relatives."
  
  

12th-Century Mediterranean

• Economist Meir Kohn cites explosive sea trade for the need for new security. "Bottomry loans" allowed ship owners to borrow money to supply outgoing vessels and pay the crew. Borrowers provided shares in ships for security. With "pignus loans," merchants supplied goods to lenders traveling overseas. The lender sold the goods to recoup the money loaned. The Church deemed sea loans "usurious" in 1236 which contributed to a decline. Also, sea loans depended heavily on the honesty of either the borrowers or the lenders.
  
  

14th-Century Italy

• The earliest recorded marine insurance policy (written in 1350) guaranteed 54 florins to the lender---unless a ship owner lost the cargo. In that event, the lender received 300 florins for the loss of the loan money. Twenty years later, insurers themselves sought security. An insurer underwriting a voyage from Genoa to Sluis purchased the first known reinsurance (stop-loss insurance) policy, buying coverage for the most dangerous leg of the trip from Cadiz.
  
  

15th-Century Europe

• The Italians became the most insured society of the period (even insuring marriage dowries), though policies for shipping and land transport spread throughout the continent. Insurers standardized the language to cover shipwrecks and seizures, among other casualties. With standardized language came printed policies including fill-in-the blank sections for borrowers. And Europeans initiated a new profession into society, that of risk assessor, while also adding new insurers. Guilds and communes received subscription income to maintain widows, orphans and the health (or burials) of their members. Guilds insured against shipping casualties, fire, death of the member, or loss of livestock.
  
  

19th-Century Europe

• Battle of Britain Firefighting - National Archives and Records Administration
  
  Large city fires in Germany and Switzerland bred a need for more reinsurance underwriting, according to David Holland, former president and CEO of Munich American Re. The Hamburg City Fire Fund suffered heavy losses in 1842 when the conflagration razed homes for 20,000 citizens. The burn sparked the birth of Cologne Re, the first official reinsurance company founded in 1846. Similarly, Swiss Re opened its doors in 1863 after a city-wide fire in Glarus two years earlier.
  
  

20th-Century America

• Benny Turpin - Wikimedia Commons
  
  The 1900s brought new assets for consumers to insure. In the U.S., an Ohio resident purchased the first auto policy in 1897 for $11.25. Massachusetts required coverage for all drivers in 1925. Also that year, American comic Benny Turpin insured his crossed eyes for $20,000 through Lloyds of London---a firm that became known for insuring celebrity bodies. Murdered oil magnate Eugene Mullendore carried life policies totaling $15,000,000 in 1970. The primary insurer offset risks to reinsurers, who ceded risks to hundreds of other companies.
  
  

Global Millennium

• Today it's possible to insure almost any asset, from ancient artwork to shiny, new Zambonis, and to insure against disasters from avian flu to zoo outbreaks. Though most consumers know their own primary insurance companies, it's more than likely that these regional and national shops seek their own "reassurance" from institutions overseas. Because many of these are global corporations with numerous divisions and subsidiaries, the wealth and risk spread around the world until it becomes difficult to tell where profits and losses lie.