in Money & Stuff

A Brief, Almost Random, Far From Comprehensive, History of (Life) Insurance

5,000 years ago in China merchants used to carry portions of each others cargo in their ships to reduce the financial consequences of piracy.

The Code of Hammurabi is the first set of written, formalized laws that we know off. It dates to sometime around 1750 BC. (NB: since I originally wrote this historians have generally agreed that the Code of Ur-Nammu predates Hammurabi by 300 years or so). It had commercial insurance in the form of allowing merchants to risk money on other people’s cargo’s at fixed rates. The State also had what many people consider the first known, formalized and written debtor insurance — essentially if you died or were seriously disabled you were let of the hook for what you owed – whether the state paid your creditors or not is murky.

In ancient Greece professional guilds provided what was essentially life and health insurance to their members. Later the Roman’s founded ‘burial clubs’, associations who’s purpose was to secure a proper burial place for and provide funds for their members burials. It sounds much more impressive in Latin.

Hadrian, of Hadrian’s wall fame is known to have had this practice legalized (2nd century AD sometime) after which it spread like wild fire. (A case of keeping up with the Claudius’s).

The first ‘modern’ written insurance contract that we have that resembles something like today’s contracts was signed in Genoa in 1347. As this is the first real paperwork or insurance contract that we actually have a copy of the Italian’s are often blamed for the incomprehensible amount of paper work and tedium surrounding the industry today.

There is a school of thought that says had they not started creating contracts signed by two parties insurance would be much simpler today. So the next time there is too much paperwork just blame the closest Italian.

In 1693 the first mortality table we know of was tabulated by Edmund Halley. It had one minor flaw however in that while he took into account the power of compound interest, it provided the same rate for all people regardless of age. 

In 1756 this was corrected and we had the first age based mortality tables that we know off. (If anyone can point me to a copy of the data from this table I would greatly appreciate it).

And then in 1688 the granddaddy of them all was formed — in Edward Lloyd’s Coffee House in London the beginning of Lloyd’s happened. There have been books written about this history so I shan’t go into it in this post. Could it be due to this coffee house history that so many insurance agents have taken to meeting in coffee shops in the modern day? As a side note LLoyd’s and London were very involved with underwriting insurance on the slave trade where the slaves were classified as cargo or perishable goods. Something they recently apologized for.

In 1759 the first permanent life assurance company was formed in the United States and not to be left behind soon after on the 21st of August 1847 Canada Life Assurance Company was founded. Both companies are still in existence today.

And that ladies and gentleman is a very brief history of Life insurance. Tell your friends, test your advisors and agents.