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The Evolution of Insurance: a Potted History

Did you know insurance dates back to the beginning of civilisation itself? It’s actually quite interesting when you start to look back at how the act of protecting against risk came about and how it all ties in with major events, newly introduced legislation and the industry of the time.

All at Sea

Perhaps not surprisingly, marine insurance appears to be the earliest form of insurance in as far as we’d recognise it today. Around the 13th or 14th Century in Genoa and Palermo in Italy, insurance policies secured on landed estates materialised. By around 1500, marine insurance was in use in England, Spain, France, Italy and Flanders. But it was London that held the reins in the insurance industry, with 30 sworn brokers in the capital by the latter part of the 16th Century. Despite competition throughout the 17th Century, London’s hold on the market remained strong and by the 18th Century, the City of London’s commitments to marine risks overseas had an annual total of several million pounds.

One London Coffee House, One Familiar Name in Insurance

The Royal Exchange Assurance and London Assurance held the monopoly for 100 years when it came to corporate marine insurance. This encouraged individual underwriters to emerge, operating from a coffee house in London. The coffee house proprietor’s name? Edward Lloyd. The adopted name for the business address? Lloyds of course!

Fire Fire!

Meantime, back in 1666, the Great Fire of London was rampaging through the City, destroying 13,000 houses in its wake. In those days, the people of London had no insurance. If their house was destroyed, they would have to personally fund the rebuilding of it.  14 years after the Great Fire, well known physician and construction entrepreneur Nicholas Barbon was compelled to do something to help people protect their property against such disasters. He founded the ‘Fire Office’ in London which was to be the very first fire insurance provider in the UK. In exchange for a yearly premium, he would pay to rebuild a home should it burn down. Within 10 years, 1 in 10 houses were insured and by the 18th Century, not only did fire insurance companies have their own fire brigades, they had their own identifying marks too, which they attached to their insured properties so the fire brigades knew which ones to save!

Hailstorms, Steam Boilers and Fidelity

During the 18th and 19th Centuries, various other types of insurance were springing up throughout Europe. From hailstorm insurance designed to protect farmers and gardeners, to livestock and steam boiler insurance, it was clear to see how cover matched with the predominant industry of the time. An early form of employers’ insurance was also introduced around the mid-19th Century. Called ‘Fidelity Insurance’, it was designed to protect employers from staff fraud or embezzlement and originated in the UK, as did the earliest form of employer’s liability cover which was devised in response to the Employers Liability Act.

On the Road

Towards the close of the 19th Century, motor insurance had been introduced. Initially designed around horse-drawn vehicles, this sector of insurance cover became the fastest growing in the 20th Century with different cover levels relating to horsepower.

Evolving Insurance Cover to Suit Today’s Needs

It’s clear to see that as industry transforms, legislation changes and major events and natural disasters rock the world, so insurance cover evolves to stay relevant and protect newly emerging risks. Now there are more cover options than ever: some of them vital, some niche and some quite outlandish, but we’ll cover those in another blog … !